22.10: ASPE/IFRS Comparison Flashcards
How do IFRS (IAS 7) and ASPE differ in their definition of cash equivalents?
IFRS (IAS 7): Preferred shares acquired close to their maturity date may be included in cash equivalents.
ASPE: Cash equivalents exclude all equity investments.
How is the presentation of interest and dividends different between IFRS (IAS 7) and ASPE?
IFRS (IAS 7): Interest and dividends received can be classified as either operating or investing cash flows. Interest and dividends paid can be classified as either operating or financing cash flows.
ASPE: Interest and dividends received are classified as operating activities. Interest and dividends paid, if charged to retained earnings, are classified as financing activities.
What are the disclosure requirements for cash flow information under IFRS (IAS 7) compared to ASPE?
IFRS (IAS 7):
Separate disclosure of interest received, interest paid, and dividends received and paid is required.
Income taxes paid must be separately disclosed.
Disclosure of any restrictions on cash and cash equivalents is required.
Changes in liabilities arising from financing activities must be disclosed, including non-cash changes.
ASPE:
Interest and dividends paid must be disclosed as financing activities.
Income taxes paid are encouraged but not required to be disclosed.
Disclosure of cash and cash equivalents with restrictions is required.
No requirement for disclosing changes in liabilities from financing activities.
What proposal did the IASB make in its 2019 Exposure Draft related to IAS 7?
The IASB proposed that companies use operating profit or loss as the starting point for the indirect method of reporting cash flows from operating activities instead of net income.
It also proposed changes to classify:
Interest paid and dividends paid as financing activities.
Interest received and dividends received as investing activities (unless the entity’s primary business involves financing customers).
