Final answer:
Companies should adopt IFRS because it encourages conservative financial reporting, enhancing reliability and credibility of financial statements. IFRS is a global standard that provides comparability and transparency, beneficial for businesses with international operations or ambitions.
Step-by-step explanation:
The question touches on the reason why companies should adopt International Financial Reporting Standards (IFRS) over Accounting Standards for Private Enterprises (ASPE).
IFRS provides a standardized and globally accepted set of accounting principles, which is beneficial for companies with international stakeholders or those looking to expand beyond domestic markets.
Comparability, transparency, and consistency in financial reporting are improved under IFRS.
The correct answer to why companies should adopt IFRS is that IFRS encourages conservative financial reporting.
This means that the standards aim to prevent overestimation of financial performance or financial position.
This conservative approach can lead to more prudent recognition of income and valuation of assets, which can enhance the credibility and reliability of financial statements among users.
In contrast to the other options, IFRS is not more flexible in recognizing revenue than other systems, it is not specific to Canadian accounting standards, and it is applicable to all companies, not just large corporations.