Michael Ingolby opened his first The Outdoor Enthusiast sporting goods store in Calgary in 1999. The store was very successful, and Michael realized he had tapped into a market that had long been neglected. He opened his second store in Calgary in 2003 and his third store in Edmonton in 2009.
Michael's successes did not go unnoticed. He was approached recently by a venture fund company that is interested in providing cash to open more stores, starting in British Columbia, then targeting the Ontario market. Michael is excited by the possibility of expanding his store concept into other provinces and is very interested in talking to the venture capitalists.
Michael has been the sole owner of The Outdoor Enthusiast. His accounting department keeps the books and prepares the financial statements. Michael also has a public accountant, John Sheppard, who audits the financial statements, prepares the tax returns, and provides financial advice to Michael. John has always ensured that the company follows generally accepted accounting principles. When IFRS came into effect in 2011, the company had to choose between following IFRS or ASPE. Since the company was private with only one shareholder, John recommended that the company follow ASPE.
The venture capitalists have indicated that if the expansion is to take place with their involvement, the company will have to follow IFRS, since the ultimate goal will be to have the company's shares trade on a public stock exchange. The venture capitalists want to review the IFRS financial statements of the company. As a starting point, they are particularly interested in reviewing the income statement.
You are an associate accountant working for John Sheppard. John has asked you to provide a short report focusing on the differences between the income statement prepared under ASPE as opposed to IFRS. He has suggested that you may want to review the financial statements of Canadian Tire Corporation or Loblaw Companies Limited to see what, if any, differences there are compared to an income statement prepared under ASPE.
Required
Write a short report outlining the differences in presentation between an income statement prepared using ASPE and one prepared using IFRS.