IFRS vs ASPE Essay

Inventory is defined as assets held for sales agreement in the general 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 expiration 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 direct 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 contractua l right, a contract that will or may be settled in the entitys own equity instruments. The main differences between IFRS and ASPE exist for scope, classification, and step of financial assets. IFRS uses four categories of financial assets fair value by dint of 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 reciprocal arrangements perspective, IFRS distinguishes joint operations from joint ventures and require proportionate consolidation for joint operations and the equity mode 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 any o f them. Another difference between these two accounting standards is the accounting for available for sale investments.IFRS requires that available for sale investments be carried at fair value with unrealized gains or losses going through other comprehensive income, whereas in ASPE at that place is no concept of other comprehensive income. Portfolio equity investments (PEI) also need to be recorded at fair value in IFRS with the unrealized gains or losses recorded through net income if PEI is categorize as held for trading and if classified available for sale unrealized gains or losses flow through other comprehensive income.In comparison with ASPE, equity investments quoted in active market are measured at fair value with gains or losses going through income. Equity investments not quoted in an active market should remain at cost, subject to impairment. Finally, investments in debt under IFRS may be classified as HFT, AFS, or HTM with an amortized cost method that uses the effe ctive interest method. This is not the case under ASPE. ASPE uses both the effective interest method and the straight cable method.