Chapter 1
Recognition and Measurement
21
Application Questions Group B
AP-1B (
1
)
For each of the individuals, companies or organizations in italics and bold below, determine
whether they are an internal or external user in the situation described.
Mike Jones
is a majority shareholder and the CFO of Jeans For Life Inc.
Crane Inc.
is a supplier of replacement parts to Ferroni Ltd., an Italian car
manufacturer.
BRO National Bank
is a lender to Creole Ltd.
Mansfield International Ltd.
is a producer of toys, who directly competes with
Bolster Ltd for the toy soldiers market share.
You
are a customer of Figley’s, a multinational chain of superstores.
The Canada Revenue Agency
is the governmental organization to whom
Megaband Ltd. just submitted its annual financial statements and tax return as
required by law.
Chloe Blinick
is the director of operations of Astana Corporation.
Navigana, a global GPS manufacturer, just released its semiannual statements to
the
shareholders
and the public.
Angel Invorssen
,
an angel investor who is interested in funding HailUs, a
promising start-up based in Toronto, is reviewing the financial statements to
determine the feasibility of the investment.
AP-2B (
1
)
Toronto Chariots F.C. is a relatively new soccer club competing in the top tier of the North
American soccer league. Two years ago, the club’s shares were offered to the public through
an initial public offering on the Toronto Stock Exchange (TSX). While initially successful,
the shares price took a hard hit as the club entered into a stretch of bad results. The club
management decided to purchase all the shares back and delist the company from the stock
market, reversing to a private ownership model. This move was finalized at the beginning
of this year. The company can potentially offer the shares to the public again in the future
but there is no certainty whether this will take place. Which reporting framework should the
Chariots use when preparing their financial statements?
