At the beginning of 2020 our team started preparing for some pretty significant changes in accounting standards for redeemable shares and future income taxes. Other significant changes were also on the horizon for various amendments to the revenue recognition standards as well as a new agriculture standard. However, that has all changed as on April 15, 2020 the Accounting Standards Board (AcSB) met and discussed ways to alleviate pressure for stakeholders as they navigate these challenging and uncertain times resulting from the COVID-19 pandemic.
As a result of their discussions, the AcSB has decided to defer the effective dates of the following amendments to Canadian Accounting Standards for Private Enterprises (ASPE) effective for years beginning on or after January 1, 2020, by one year to January 1, 2021:
- Amendments to Section 3051, Investments;
- Amendments to Section 3465, Income Taxes; and
- Amendments to Section 3856, Financial Instruments.
We suspect that this will come as good news to many as included in the above amendments are the changes to the accounting for Retractable or Mandatorily Redeemable Shares Issued in a Tax Planning Arrangement which is expected to result in a reclassification and remeasurement of these shares from equity to liabilities. These changes had been in development for quite some time and are undoubtedly the most controversial amendments to ASPE since it was introduced. Given the negative impact that COVID-19 will have on may private enterprises balance sheets in the coming months the deferral of these amendments and additional time for planning will likely be appreciated by many business owners.
The AcSB is also deferring the effective dates of the new Section 3041, Agriculture, and amendments to Section 3400, Revenue, effective for years beginning on or after January 1, 2021, by one year to January 1, 2022.
Early adoption of each of these amendments and new Section 3041 continues to be permitted. Click here to find the AcSB Decision Summary for April 15, 2020 that details the above changes.