Question

Usually a comparison assignment involves comparing two similar companies that are reporting under different GAAP. Ideally, it would be better to compare the same company's financial reports prepared on two different bases. First Capital Realty adopted IFRS in 2011. It is possible to analyze its 2010 results under both bases using the IFRS figures reported in its financial statements for the year ended December 31, 2011 and the ASPE figures reported for year ended December 31, 2010.
Instructions
Access the financial statements for First Capital Realty for the years ended December 31, 2010, and December 31, 2011, from the company's website. Review the statements that are presented and answer the following questions.
(a) What business is First Capital Realty in?
(b) Compare the accounting policies used to report investment properties and development properties under IFRS and ASPE. 'What are the effects of these differences on the balance sheer,
income statement, and statement of cash flows? Be specific.
(c) Calculate the following ratios for the company's year ended December 31, 2010, under both
ASPE and IFRS:
1. Total asset turnover
2. Profit margin
3. Return on assets
(d) Comment on the results obtained in part (c). In your opinion, which set of ratios provides a better assessment of the company's profitability? Explain.
(e) Based on your findings, write a short hypothetical memo to the chief financial officer (CFO) of a Canadian company in the same business as First Capital Realty. You need to alert the CFO to the possible effects that the company will experience when adopting IFRS.


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  • CreatedSeptember 18, 2015
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