Extracts from relevant Accounting Standards for Private Enterprises (ASPE)
Section 3475, Disposal of Long-Lived Assets and Discontinued Operations, paragraphs 3475.13, 3475.19, and 3475.36
Section 3475 establishes the standards for the recognition, measurement, presentation, and disclosure of the disposal of long-lived assets. It also establishes standards for the presentation and disclosure of discontinued operations, whether or not they include long-lived assets. For example, an entity disposing of manufacturing equipment that produces high greenhouse gas emissions as it relates to its climate change/carbon reduction strategy, or an entity discontinuing a segment of its business that is no longer profitable due to changing consumer demand and/or an increase in transition risks will need to consider how the standards in Section 3475 apply. Transition risk refers to the potential financial and operational challenges that organizations face as they adapt to a low-carbon, sustainable economy. These risks, as defined and discussed by the Corporate Finance Institute and the U.S. Environmental Protection Agency, arise from changes in policies, regulations, market dynamics, and technologies aimed at reducing greenhouse gas emissions and mitigating climate change.
For example, paragraphs 3475.36 and 3475.37 note that a description of the long-lived asset and the facts and circumstances leading to the disposal shall be disclosed in the period of disposal or classified as held for sale. If climate-related risks and opportunities shift an entity’s sustainability strategy causing certain assets and associated liabilities to be held for sale, an entity would disclose the facts and circumstances of this shift in the financial statement note disclosures while also considering the recognition, measurement, and presentation guidance in Section 3475.
