Decision Summary January 12, 2017

This summary of Accounting Standards Board (AcSB) decisions has been prepared for information purposes only. Decisions reported are tentative and reflect only the current status of discussion on projects, which may change after further deliberations by the AcSB. Decisions to publish Handbook material are final only after a formal ballot process.

International Financial Reporting Standards

IFRS Discussion Group

The AcSB discussed and approved its submission to the IFRS Interpretations Committee relating to the issue raised by the Group at its September 2016 meeting on “IFRS 3 and IAS 39/IFRS 9: Transaction Price Allocation,” subject to drafting changes.

Standards for Private Enterprises

Financial Instruments – Post-implementation Review

The AcSB approved a project to address several narrow-scope issues identified during the Post-implementation Review of Section 3856, Financial Instruments, associated with the scope of related party transactions and measurement of related party compound financial instruments and disclosure.

The AcSB discussed whether several other topics, including fair value measurement, hedge accounting, derecognition and classification of equity and financial liabilities, have merit in being added to its work plan. The AcSB agreed that if these topics are added to its work plan, they would need to be addressed through major projects. Therefore, the AcSB will consider these topics in the context of its consultation with stakeholders about the relative priorities for Part II projects.

Private Enterprise Advisory Committee

As part of its due process, the AcSB considers whether amendments made to accounting frameworks in other jurisdictions would significantly improve accounting standards for private enterprises (ASPE). At this meeting, the AcSB discussed the Private Enterprise Advisory Committee’s recommendations on recent amendments made to the following accounting frameworks:

  • IFRSs issued or amended by the IASB since December 2015.
  • The IFRS for Small and Medium-sized Entities amended by the IASB in 2015.
  • New or amended standards under U.S. GAAP issued by the U.S. Financial Accounting Standards Board (FASB) since February 2014, including amendments as a result of input provided by FASB’s Private Company Council.

The AcSB decided to include the following in its consideration of priorities for ASPE:

  • The benefit of amortizing goodwill and providing relief from the recognition of intangible assets on business combinations.
  • Clarifying the definition of a business to help distinguish between the acquisition of a business and a group of assets. 

The AcSB also discussed two amendments, as recommended by the Committee. These topics, and the AcSB’s decisions, are as follows:

  • Reduce the threshold stipulated in Section 1625, Comprehensive Revaluation of Assets and Liabilities, to apply push-down accounting.  Section 1625 currently requires all or virtually all of the equity interests in the enterprise to have been acquired in order to apply the option to revalue assets and liabilities comprehensively. The AcSB directed the staff to conduct further research to assess whether such a change would provide significant benefit to stakeholders.
  • Eliminate the requirements in Section 3465, Income Taxes, to segregate future tax assets and liabilities into current and non-current portions when the future tax method is applied. The AcSB directed the staff to consider the approach to undertake a project to address this topic.

The AcSB also agreed with the Committee’s recommendation that no amendments should be considered at this time relating to: 

  • including an option to revalue property, plant and equipment in Section 3061, Property, Plant and Equipment;
  • providing additional guidance in Section 3064, Goodwill and Intangible Assets, on the accounting treatment for cloud computing arrangements; and
  • the recently issued IFRS and U.S. GAAP standards on leasing.

Redeemable Preferred Shares

The AcSB discussed the results of field testing conducted to assess the viability of permitting a classification exception on the condition of retention of control of an enterprise. The field testing consisted of analyses conducted by assurance and tax practitioners of actual tax planning arrangements commonly executed.

In particular, the AcSB considered the following, based on the results of the field testing:

  • whether the current guidance in Section 1591, Subsidiaries, is sufficiently robust to address the characteristics of redeemable preferred shares issued in a tax planning arrangement;
  • the perspective from which control of the enterprise should be considered; and
  • other conditions that are necessary, in addition to retention of control of the enterprise.

The AcSB decided that the basis for the classification exception should be on the condition of retention of control of an enterprise and that additional guidance may be needed relating to the control assessment. In addition, the AcSB decided that other conditions are necessary in order to qualify for the classification exception.

The AcSB noted that at least some of the tax planning arrangements that meet the classification exception under the current guidance will not qualify for the exception under the proposed basis.  Accordingly, the AcSB directed the staff to obtain feedback from its Private Enterprise Advisory Committee on the effect of its decisions on current practice. At its March 21-22, 2017 meeting, the AcSB will consider the input received from the Committee. The AcSB will also begin to discuss transitional provisions. 

Due Process

AcSB 2016-2017 Draft Interim Performance Report

The AcSB approved an initial draft of its performance report for the year ending March 31, 2017. The draft report will be presented to the Performance Review Committee of the Accounting Standards Oversight Council in accordance with the AcSB’s governance procedures. The AcSB expects to approve its performance report in May 2017, after considering the Committee’s and the Council’s input.

AcSB Research Program

The AcSB discussed the objectives of its research program, what activities constitute research in a Canadian standard-setting context and methods of engaging stakeholders, including the academic community, in the research process. The AcSB also considered the research programs of standard setters in other jurisdictions. No decisions were made.

Note: All of the AcSB’s responses to documents for comment issued by the IASB and the IFRS Interpretations Committee are available on the IASB’s website at