How does impairment of Accounts Receivable differ under IFRS compared to ASPE?

Under IFRS, impairment of Accounts Receivable is assessed using an expected credit loss model, which involves estimating expected losses over the life of the asset rather than solely relying on historical data. This means that under IFRS, accounts receivable are recorded at their net realizable value, which is adjusted for anticipated losses. This proactive approach aims to provide a more realistic picture of potential future losses and ensures that financial statements are more reflective of current economic conditions.

In contrast, ASPE (Accounting Standards for Private Enterprises) primarily employs a method where impairment is determined by considering triggering events, which may lead to recognizing impairment losses only when specific indicators suggest that carrying amounts might not be recoverable. This approach does not require the same level of estimation and forward-looking assessment as IFRS.

The difference in methodology reflects the broader principles and objectives underlying IFRS, which emphasizes timely recognition of costs and potential losses, making the correct choice focused on this critical distinction between the two accounting frameworks.