In Canada, accounting standards have been tailored to meet the needs of a diverse array of companies. In some sectors, companies are able to choose which set of accounting standards best suits their needs. In other sectors, such as publicly traded companies, they have no choice and are required to adopt International Financial Reporting Standards (IFRS).

Private companies are given a choice, and must decide which "Canadian GAAP" best meets their needs and those of their users. Private companies have a choice of two sets of accounting standards: Accounting Standards for Private Enterprises (ASPE) or IFRS.

Instructions

(a) What is the key difference between private and public companies?

(b) Who are the key users of public company financial statements? Who are the key users of private company financial statements?

(c) What is the key difference between users of private company financial statements and users of public company financial statements?

(d) Why do you think public companies do not have a choice regarding which accounting standards they use?

(e) Why do you think private companies do have a choice regarding the accounting standards they use?