TABLE OF CONTENTS MODEL FINANCIAL STATEMENTS PRIVATE ENTERPRISES PART II OF THE CPA CANADA HANDBOOK ACCOUNTING. Page

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Blaise Hart
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GENERAL COMMENTS ON THE MODEL FINANCIAL STATEMENTS Application... 1 Canadian accounting standards for private enterprises... 1 Available for use by all private enterprises... 2 Disclosures.

.. 5 PART 1: ACCOUNTING STANDARDS ANALYSIS BASED ON THE STRUCTURE OF FINANCIAL STATEMENTS Presentation Tables of concordance 1 Statement by statement analysis of the standards 1.1 Introduction... 1 1.

1 GENERAL COMMENTS ON THE MODEL FINANCIAL STATEMENTS Application... 1 Canadian accounting standards for private enterprises... 1 Available for use by all private enterprises... 2 Disclosures... 3 Other elements... 4 Decimal sign, thousands, millions... 4 Use of parentheses... 4 Use of the term year... 4 Consolidated and non-consolidated financial statements... 5 PART 1: ACCOUNTING STANDARDS ANALYSIS BASED ON THE STRUCTURE OF FINANCIAL STATEMENTS Presentation Tables of concordance 1 Statement by statement analysis of the standards 1.1 Introduction Balance sheet Statements of income and retained earnings Cash flow statement Specific circumstances Consolidated financial statements Specific circumstances Comprehensive revaluation of assets and liabilities Specific circumstances Unincorporated businesses Analysis of the standards by asset item 2.1 Financial assets Inventories Prepaid expenses Future income taxes (current and non-current) Assets held for sale Investments Interests in joint ventures Subsidiaries Assets related to leases Property, plant and equipment Goodwill and intangible assets Analysis of the standards by liability and equity item 3.1 Financial liabilities and equity instruments Other current liabilities Contingent liabilities Lease liabilities Asset retirement obligations Other long-term debt PAGE XVI

2 3.7 Employee future benefits Share capital Contributed surplus and other components of equity Retained earnings Analysis of the standards on revenue recognition 5 Other analyses of the standards by notes to the financial statements 5.1 First-time adoption of the standards Disclosure of accounting policies Accounting changes Measurement uncertainty Business combinations Foreign currency translation Contractual obligations Discontinued operations Subsequent events Non-monetary transactions Related party transactions Economic dependence Government assistance and investment tax credits Interest capitalized Stock-based compensation and other stock-based payments Disclosure of guarantees Entities subject to rate regulation PART 2: MODEL FINANCIAL STATEMENTS MODEL A Consolidated financial statements... 1 Comments on the independent auditor's report... 2 Independent auditor's report... 3 Comments on the review engagement report... 4 Consolidated income statement... 6 Consolidated statement of retained earnings... 7 Consolidated balance sheet... 8 Consolidated cash flow statement Notes to the financial statements Accounting policies Business acquisition Discontinued operations Information about consolidated income statement items Trade and other accounts receivable Inventories Investment in an entity subject to significant influence PAGE XVII

3 8. Other investments Property, plant and equipment Intangible assets Bank overdraft and loan Accounts payable Warranty provisions Obligations under capital leases Long-term debt Employee future benefits Issued share capital Contributed surplus Contractual obligations Contingencies Related party transactions Economic dependence Subsequent events Non-monetary transactions Financial instruments Consolidated appendices Appendix A Appendix B Appendix C Appendix D MODEL B Non-consolidated financial statements... 1 Comments on the independent auditor's report... 2 Independent auditor's report... 3 Comments on the review engagement report... 4 Review engagement report... 5 Non-consolidated income statement... 6 Non-consolidated statement of retained earnings (deficit)... 8 Non-consolidated balance sheet... 9 Non-consolidated cash flow statement Notes to the financial statements Accounting policies Business acquisition Rents receivable Investments in subsidiaries Investments in entities subject to significant influence Investment in a joint venture Other investments Property, plant and equipment PAGE XVIII

4 9. Bank overdraft Accounts payable Long-term debt Issued share capital Taxes payable method Reconciliation of amounts Contractual obligation Contingencies Related party transactions Net change in non-cash items related to operating activities Subsequent events Financial instruments Financial risks ADDITIONAL EXAMPLES OF NOTES AND FINANCIAL STATEMENT PRESENTATION 1 SIGNIFICANT ACCOUNTING POLICIES... 1 A. REQUIRED ACCOUNTING POLICIES Cash and cash equivalents Inventories Accounting for expenditures on internally generated intangible assets Investment accounted for at the redemption amount Investments Employee future benefits Defined benefit plans (under 3462) Hedge accounting Income taxes Scientific research and experimental development (SR&ED) tax credits Financial instruments Specific circumstances Revenue recognition policy... 6 B. SIGNIFICANT ACCOUNTING POLICIES ( ) Revenue-generating buildings Work in progress Leases Costs Cost of goods sold Franchising costs Business combinations Asset retirement obligations C. ACCOUNTING CHANGES (1506) First-time adoption of Section 3462, Employee Future Benefits Prior period adjustment Changes in accounting estimates FINANCIAL STATEMENT ITEMS EXAMPLES OF NOTES AND FINANCIAL STATEMENT PRESENTATION Trade and other accounts receivable Advances to the shareholder... 1 PAGE XIX

5 2.3 Goodwill Property, plant and equipment not being amortized Internally generated intangible assets Capitalized interest Investment subject to significant influence Investments Line of credit Bank advances and standby letters of credit Accounts payable Derivative financial instruments (with and without hedge accounting) Taxes payable method Reconciliation Callable and revolving long-term debt (debt presented as current) Long-term debt Interest-free loan Long-term debt Conversion option Long-term debt Covenants (debt presented as current) Long-term debt Covenants (debt presented as non-current) Deferred grants related to capital assets Asset retirement obligations Defined benefit plan (under 3462) Due to the shareholder Share capital Non-controlling interest OTHER EXAMPLES OF NOTES AND FINANCIAL STATEMENT PRESENTATION Non-consolidated financial statements (additional sets of financial statements) Unincorporated business Going concern (non-going concern or doubt about the going concern assumption) Financial instruments Financial risks Employee future benefits Special cases Disposal of assets (not meeting the definition of a discontinued operation set out in (e)) Disposal of assets (meeting the definition of a discontinued operation set out in (e)) Commitments and contingencies Subsequent events Measurement uncertainty Related party transactions Business restructuring Business combinations Economic dependence Tax loss carry-forwards and deductible temporary differences Comparative figures PAGE XX

6 MODEL C Consolidated financial statements... 1 Comments on the independent auditor's report First-time adoption of ASPE... 2 Independent auditor's report... 3 Comments on the review engagement report First-time adoption of ASPE... 4 Review engagement report... 5 Consolidated income statement... 6 Consolidated statement of retained earnings... 7 Consolidated balance sheet... 8 Consolidated cash flow statement Excerpts from the notes to the financial statements Impact of first-time adoption of Canadian accounting standards for private enterprises A. Investments B. Property, plant and equipment C. Leased assets and obligations under capital leases D. Future income taxes E. Reconciliation of consolidated retained earnings in the consolidated financial statements as at January 1, 20X F. Reconciliation of the net loss in the consolidated financial statements as at December 31, 20X G. Reconciliation of consolidated retained earnings in the consolidated financial statements as at December 31, 20X Property, plant and equipment MODEL D (Additional Information First-time Adoption) Model D... 1 Comments on the independent auditor's report First-time adoption of ASPE... 2 Independent auditor s report... 3 Comments on the review engagement report First-time adoption of ASPE... 4 Review engagement report... 5 Comments on the comparative financial statements... 6 Notes to the financial statements Property, plant and equipment... 8 INDEX BIBLIOGRAPHY PAGE XXI

GENERAL COMMENTS ON THE MODEL FINANCIAL STATEMENTS

GENERAL COMMENTS ON THE MODEL FINANCIAL STATEMENTS Application... 1 Canadian accounting standards for private enterprises... 2 Available for use by all private enterprises... 3 Disclosures... 4 Other elements...