In an October 2020 exposure draft, the Accounting Standards Board (“AcSB” or the “Board”) proposed several improvements to Accounting Standards for Private Enterprises (“ASPE”) and Accounting Standards for Not-for-Profit Organizations (“ASNPO”). The following is a summary of the proposals.
- First-time adoption: The Board proposes to permit that an enterprise / organization re-adopting ASPE or ASNPO could re-apply the first-time adoption provisions in Section 1500, First-time Adoption or Section 1501, First-time Adoption by NPOs . The AcSB is also considering the need for note disclosure about why an enterprise re-adopted ASPE.
- Presentation of related party balances: The Board proposes to revise Section 1510, Current Assets and Current Liabilities to clarify that an enterprise may present amounts owing on loans from directors, officers and shareholders, and amounts owing to parent and other affiliated companies, either separately on the face of the balance sheet or in the notes to the financial statements.
- Cash flow statement disclosures: The Board proposes to remove a requirement in Section 1540, Cash Flow Statement to disclose the total assets and total liabilities acquired or disposed of in a business combination or in a disposal of assets.
- Measurement of investments in a related party transaction: Illustrative Example 3 in Section 3840, Related Party Transactions, illustrates the accounting for newly issued shares in a related party transaction by the enterprise receiving the shares. Section 3856, Financial Instruments, specifically excludes from its scope the measurement of interests in subsidiaries, enterprises subject to significant influence and jointly controlled enterprises. Therefore, the Board proposes to clarify in the illustrative example which standard applies for the measurement of the investment by the enterprise receiving the shares.
- Measurement of newly issued common shares in a related party transaction: Illustrative Example 3 in Section 3840, Related Party Transactions also demonstrates the initial measurement of share capital from the issuers’ perspective. However, the measurement basis is different from illustrative Example 3 in Section 3856 for a similar fact pattern. The Board seeks to make the Illustrative Examples consistent.
You can view the full exposure draft here. The AcSB expects to issue the final amendments in the second quarter of 2021. The amendments will be effective for years beginning on or after January 1, 2022. Earlier application is permitted. The AcSB intends that the amendments be applied retrospectively.