IFRS vs. ASPE
Canada has two GAAP regimes:
| Standard | Mandatory For | Optional For |
|---|---|---|
| IFRS (International Financial Reporting Standards) | Publicly accountable enterprises (listed companies, financial institutions) | Private enterprises that want IFRS |
| ASPE (Accounting Standards for Private Enterprises) | — | Private enterprises (default Canadian private GAAP) |
ADMN 201 teaches that “IFRS is for public, ASPE is for private.” ACC 926 teaches where the two standards actually disagree — which matters for every concept page in concepts/Accounting/.
Why Two Standards Exist
ASPE was created so private Canadian companies wouldn’t have to bear IFRS’s full disclosure cost. The trade-off:
| IFRS | ASPE | |
|---|---|---|
| Disclosure burden | Heavy | Lighter |
| Policy choices | Few (uniformity) | Many (flexibility) |
| Fair value usage | Frequent | Less frequent |
| Comparability with global firms | High | Low |
Where They Diverge — By Module
graph TD M[ACC926 Modules] M --> M4[Mod 4 Performance] M --> M6[Mod 6 Revenue] M --> M9[Mod 9 Investments] M --> M10[Mod 10 PPE] M --> M11[Mod 11 Impairment] M --> M12[Mod 12 Goodwill] M4 --> D4[OCI required IFRS only<br/>Statement of Changes in Equity IFRS<br/>Statement of Retained Earnings ASPE] M6 --> D6[5-step asset-liability IFRS<br/>Earnings approach permitted ASPE] M9 --> D9[FV-OCI category IFRS only<br/>ASPE: cost or FV-NI only] M10 --> D10[Revaluation model IFRS only<br/>ASPE: cost model only] M11 --> D11[Rational Entity Model IFRS<br/>Cost Recovery Model ASPE] M12 --> D12[Goodwill annual impairment test IFRS<br/>Tested when triggered ASPE]
(diagram saved)
Detailed Differences Table
| Topic | IFRS | ASPE |
|---|---|---|
| Comprehensive income / OCI | Required | No OCI; uses Statement of Retained Earnings |
| Equity statement | Statement of Changes in Equity | Statement of Retained Earnings |
| Revenue recognition | IFRS 15 5-step asset-liability approach | Earnings approach permitted |
| Investments — measurement categories | FV-NI · FV-OCI · Amortized cost | Cost · FV-NI (no FV-OCI) |
| PPE — subsequent measurement | Cost OR Revaluation model | Cost model only |
| Investment property | Separate classification (FV optional) | Treated as PPE |
| Borrowing costs on qualifying assets | Capitalize (required) | Capitalize OR expense (policy choice) |
| Impairment of long-lived assets | Rational Entity Model (recoverable amount = higher of FV-cost-to-sell, value-in-use) | Cost Recovery Model (undiscounted CF screen, then FV) |
| Reversal of impairment | Permitted (except goodwill) | Not permitted |
| Goodwill impairment test | Annual + when triggered | Only when triggered |
| Discontinued operations | Strict criteria (component disposed/held-for-sale) | Broader scope |
| Earnings per share | Required (public) | Not required |
| Lease accounting | IFRS 16 — single on-BS model for lessees | ASPE 3065 — operating vs. capital lease split |
| Fair value hierarchy | IFRS 13 Levels 1–3 | Less prescriptive |
How to Apply on Exam Questions
- Read the entity description first. Public, listed, financial institution → IFRS. Private Canadian → assume ASPE unless told otherwise.
- Check for policy choices. ASPE often allows the firm to pick (e.g., capitalize OR expense borrowing costs). IFRS usually mandates one method.
- Remember OCI is IFRS-only. Any “FV-OCI” category, recycling question, or statement of comprehensive income is IFRS territory.
- Goodwill rules are different. IFRS = annual test. ASPE = trigger-based test.
- Impairment models have different names. ASPE = Cost Recovery Model (undiscounted screen). IFRS = Rational Entity Model.
Cross-Course Connections
- Accounting — ADMN 201 introduces both as labels
- ConceptualFramework — both standards rest on the same conceptual framework
- RevenueRecognition5Step — IFRS-specific 5-step process
- Investments — IFRS adds FV-OCI category
- PPE — IFRS allows revaluation model
- Depreciation — different impairment models
Key Points
- IFRS = public; ASPE = private (default rule)
- ASPE gives more policy choices; IFRS prefers uniformity
- OCI exists only under IFRS
- Revaluation model exists only under IFRS (PPE, intangibles)
- Impairment reversal allowed under IFRS (except goodwill); never under ASPE
- Goodwill: IFRS tests annually; ASPE only when triggered