IFRS vs ASPE
Inventory
Inventory is defined as “assets held for sale in the ordinary course of business, in the process of production for such sale, or in the form of materials or supplies to be consumed in the production process or in the rendering of services”. The cost of inventory is measured at the lower of cost and net realizable value. The IFRS accounting for inventory is generally converged with ASPE. The only difference between IFRES and ASPE in the accounting for inventory is with borrowing costs. Since some inventory products require significant manufacturing time (qualifying assets), a manufacturer will finance its operating costs by borrowing money. Under ASPE we can choose to capitalize borrowing costs relating to inventory that takes substantial time to get it ready for sale. In comparison with IFRS, borrowing costs associated with qualifying assets are capitalized.
Financial Assets financial assets refer to any asset that is “cash, an equity instrument of another entity, a contractual right, a contract that will or may be settled in the entity's own equity instruments”. The main differences between IFRS and ASPE exist for scope, classification, and measurement of financial assets. IFRS uses four categories of financial assets: fair value through profit or loss (FVTPL), held-to-maturity (HTM), loans and receivable, and available for sale. ASPE does not use the four categories to group the financial assets. Instead, investments are categorized by their nature: equity, debt, and derivatives. For the joint arrangements perspective, IFRS distinguishes joint operations from joint ventures and require proportionate consolidation for joint operations and the equity method for joint ventures. ASPE, on the other hand, does not distinguish between joint operations from joint ventures and uses the term joint venture to refer to both types of joint arrangements. ASPE allows the proportionate consolidaton, the equity method, and the cost method without any preference for
Inventory is defined as “assets held for sale in the ordinary course of business, in the process of production for such sale, or in the form of materials or supplies to be consumed in the production process or in the rendering of services”. The cost of inventory is measured at the lower of cost and net realizable value. The IFRS accounting for inventory is generally converged with ASPE. The only difference between IFRES and ASPE in the accounting for inventory is with borrowing costs. Since some inventory products require significant manufacturing time (qualifying assets), a manufacturer will finance its operating costs by borrowing money. Under ASPE we can choose to capitalize borrowing costs relating to inventory that takes substantial time to get it ready for sale. In comparison with IFRS, borrowing costs associated with qualifying assets are capitalized.
Financial Assets financial assets refer to any asset that is “cash, an equity instrument of another entity, a contractual right, a contract that will or may be settled in the entity's own equity instruments”. The main differences between IFRS and ASPE exist for scope, classification, and measurement of financial assets. IFRS uses four categories of financial assets: fair value through profit or loss (FVTPL), held-to-maturity (HTM), loans and receivable, and available for sale. ASPE does not use the four categories to group the financial assets. Instead, investments are categorized by their nature: equity, debt, and derivatives. For the joint arrangements perspective, IFRS distinguishes joint operations from joint ventures and require proportionate consolidation for joint operations and the equity method for joint ventures. ASPE, on the other hand, does not distinguish between joint operations from joint ventures and uses the term joint venture to refer to both types of joint arrangements. ASPE allows the proportionate consolidaton, the equity method, and the cost method without any preference for