As you learn more about accounting, you will learn that for certain economic events or transactions, companies reporting under ASPE can choose between alternative accounting methods. For example, corporations can choose between different methods for accounting for income tax and investments. Typically, if the company reporting under ASPE has a choice between alternative methods, one accounting method is much simpler to apply and requires less disclosure.
Instructions
Explain why it is appropriate that companies reporting under ASPE can choose between alternative accounting methods to report certain events or transactions. Include references to the objective of financial reporting and qualitative characteristics in your explanation.
Taking It Further
Typically, when a company reporting under ASPE has a choice between alternative accounting methods, the alternative method that is more complex and requires more disclosure is consistent with the method required under IFRS. Why do you think some private companies reporting under ASPE might decide to use a method that is consistent with IFRS?