New and Proposed Changes to ASPE Sections for the Two Years Ended - September 30, 2018 - MNP LLP
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New and Proposed Changes to ASPE
Sections for the Two Years Ended
September 30, 2018
MNP.ca
New and Proposed Changes to ASPE Sections for the Two Years Ended
September 30, 2018
NEW AND AMENDED STANDARDS DATE EFFECTIVE DATE
ISSUED
2017 Annual Improvements to Accounting July 2017 Effective for fiscal years beginning on or after
Standards for Private Enterprises January 1, 2018. Early application is permitted.
(Amendment)
ASPE 1591 Subsidiaries and 3051 December Effective for periods beginning on or after
Investments (Amendment) 2016 January 1, 2018. Early application is permitted.
ASPE 1591 Subsidiaries and 3056 Interests December Effective for periods beginning on or after
in Joint Arrangements (Amendment) 2016 January 1, 2017 for amendments to ASPE
1591 and January 1, 2018 for amendments to
ASPE 3056. Early application is permitted.
EXPOSURE DRAFTS DATE EFFECTIVE DATE
ISSUED
Draft Framework for Reporting Performance June 2018 Non-authoritative guidance.
Measures
Investments (Proposed Amendments to September Proposed to be effective for fiscal years
ASPE 3051) 2018 beginning on or after January 1, 2020. Earlier
application will be permitted.
Income Taxes (Proposed Amendments to September Proposed to be effective for fiscal years
ASPE 3465) 2018 beginning on or after January 1, 2020. Earlier
application will be permitted.
Agriculture (Proposed ASPE 3041) July 2018 Proposed to be effective for fiscal years
beginning on or after January 1, 2021. Earlier
application will be permitted.
Accounting for Related Party Financial October 2017 Proposed to be effective for fiscal years
Instruments and Significant Risk Disclosures beginning on or after January 1, 2020. Earlier
(Proposed Amendments to ASPE 3856) application will be permitted.
Retractable or Mandatorily Redeemable September Proposed to be effective for fiscal years
Shares Issued in a Tax Planning 2017 beginning on or after January 1, 2020. Earlier
Arrangement (Proposed Amendments to application will be permitted.
ASPE 1591, 3251 and 3856)
Page 1
This communication contains a general overview of the topic and is current as of September 30, 2018. This information is not a substitute for professional advice and we recommend that any decisions
you take about the application or not of any of the information presented be made in consultation with a qualified professional. Contact your local MNP representative for customized assistance with the
application of this material. MNP LLP accepts no responsibility or liability for any loss related to any person's use of or reliance upon this material. © MNP LLP 2018. All rights reserved.New and Proposed Changes to ASPE Sections for the Two Years Ended
September 30, 2018
New and Amended Standards
2017 Annual Improvements to Accounting Standards for Private Enterprises (Amendment)
In July 2017, as part of its program of annual improvements to its standards, the Accounting Standards Board
(AcSB) issued improvements to Accounting Standards for Private Enterprises (ASPE) as set out in Part II of the
CPA Canada Handbook – Accounting.
The following summarizes the amendments:
ASPE 1505 Disclosure of Accounting Policies
Requires disclosure of accounting policies “as the first note” to rather be provided “in one of the first notes” to the
financial statements.
ASPE 1506 Accounting Changes
Removal of the requirement to disclose the amount of an adjustment related to an accounting policy change for the
current period, and to require disclosure “for each of the prior periods presented”.
ASPE 1521 Balance Sheet
Clarifies the existing presentation and disclosure requirements in ASPE 1521 related to assets under capital leases
requirements. Also clarifies the requirements of ASPE 1521 in relation to the presentation and disclosure
requirements of other standards in Part II of the Handbook.
ASPE 1651 Foreign Currency Translation
Removal of the requirement prohibiting the reversal of previously recorded write-downs of inventory in the
translated financial statements of an integrated foreign operation and clarification of a related illustrative example
ASPE 3065 Leases
Clarifies that for impaired operating lease receivables only the amount of the allowance for impairment is required
to be disclosed and not the carrying amount.
All of the above amendments are effective for fiscal years beginning on or after January 1, 2018. Early application
is permitted.
ASPE 1591 Subsidiaries and 3051 Investments (Amendment)
In December 2016, the Accounting Standards Board (AcSB) issued amendments to ASPE 1591 Subsidiaries and
ASPE 3051 Investments to clarify the accounting for a subsidiary and an investment subject to significant influence
when the cost method is used.
The following summarizes the amendments:
ASPE 1591 Subsidiaries
Amendments include:
▪ Set out the underlying principle that an interest in a subsidiary that is subsequently accounted for using the
cost method is initially measured on a basis that is similar to other business combinations.
▪ Add guidance on how to apply the cost method in accordance with that underlying principle, except that an
enterprise does not recognize bargain purchase gains and measures acquisitions of additional interests at
cost.
▪ Add guidance on the subsequent measurement of an interest in a subsidiary.
▪ Add disclosure requirements that apply when an enterprise chooses to account for its subsidiaries by applying
the cost or equity method, and therefore, prepares non-consolidated financial statements.
Page 2
This communication contains a general overview of the topic and is current as of September 30, 2018. This information is not a substitute for professional advice and we recommend that any decisions
you take about the application or not of any of the information presented be made in consultation with a qualified professional. Contact your local MNP representative for customized assistance with the
application of this material. MNP LLP accepts no responsibility or liability for any loss related to any person's use of or reliance upon this material. © MNP LLP 2018. All rights reserved.New and Proposed Changes to ASPE Sections for the Two Years Ended
September 30, 2018
ASPE 3051 Investments
Amended to provide guidance on how to apply the cost method and include two additional indicators of impairment
relating to the acquisition of an additional interest, sale of a portion of an interest or dilution of an investor’s interest
in an investee.
Significant consequential amendments include changes to:
▪ ASPE 1500 First-time Adoption, to permit a first-time adopter to apply the transitional provisions amended
in ASPE 1591 and 3051.
▪ ASPE 1582 Business Combinations, to require certain disclosures only when consolidated financial
statements are prepared.
All of the above amendments are effective for periods beginning on or after January 1, 2018. Early application is
permitted.
ASPE 1591 Subsidiaries and 3056 Interests in Joint Arrangements (Amendment)
In December 2016, the Accounting Standards Board (AcSB) issued amendments to ASPE 1591 Subsidiaries and
3056 Interests in Joint Arrangements.
The following summarizes the amendments:
ASPE 1591 Subsidiaries
Amendments to ASPE 1591 clarify that:
▪ The transitional provisions in ASPE 1591.42 – ASPE 1591.47 may not be applied when an enterprise
changes its accounting policy choice to consolidate its subsidiaries at any time in the future and that this
relief is only available to enterprises transitioning to ASPE 1591 for the first time.
▪ An enterprise preparing non-consolidated financial statements is not required to assess whether
contractual arrangements give rise to control.
The amendments to ASPE 1591 are effective for periods beginning on or after January 1, 2017. Early application is
permitted.
ASPE 3056 Interests in Joint Arrangements
Amended to clarify that the transitional provisions in paragraphs ASPE 3056.44 – 3056.49 may not be applied
when an enterprise changes its accounting policy choice to consolidate its subsidiaries at any time in the future and
that this relief is only available to enterprises transitioning to ASPE 3056 for the first time.
The amendments to ASPE 3056 are effective for periods beginning on or after January 1, 2018. Early application is
permitted.
Page 3
This communication contains a general overview of the topic and is current as of September 30, 2018. This information is not a substitute for professional advice and we recommend that any decisions
you take about the application or not of any of the information presented be made in consultation with a qualified professional. Contact your local MNP representative for customized assistance with the
application of this material. MNP LLP accepts no responsibility or liability for any loss related to any person's use of or reliance upon this material. © MNP LLP 2018. All rights reserved.New and Proposed Changes to ASPE Sections for the Two Years Ended
September 30, 2018
Exposure Drafts
Draft Framework for Reporting Performance Measures
In June 2018, the Accounting Standards Board (AcSB) issued a Draft Framework for Reporting Performance
Measures (the “Framework”). The Framework provides voluntary guidance on developing and reporting non-GAAP
financial measures, other financial measures, and non-financial or operational measures. The aim of this
Framework is to assist entities in enhancing the transparency, consistency and comparability of financial and non-
financial performance measures reported outside the financial statements.
A public company, not-for-profit organization, private company or pension plan can apply this Framework to a
financial, non-financial or operational performance measure.
The key features of this Framework include:
▪ Characteristics of a high-quality performance measure.
▪ The application of materiality and cost benefit constraints when developing and reporting a performance
measure.
▪ A robust process for assessing what performance measure to report, and for developing and reporting
relevant performance measures, that includes:
(i) Selecting a relevant performance measure that can be faithfully depicted.
(ii) Applying materiality and cost benefit constraint considering the type and size of an entity and the
complexity of its activities.
(iii) Establishing policies, controls and procedures to ensure consistency, comparability, verifiability,
timeliness, and understandability.
(iv) Reinforcing with governance practices.
This Framework is non-authoritative guidance and has not been finalized to date.
Investments (Proposed amendments to ASPE 3051)
In September 2018, the Accounting Standards Board (AcSB) issued an Exposure Draft (ED) that proposes narrow
scope amendments to ASPE 3051 Investments. The proposed amendments would clarify that the guidance
relating to the cost method in ASPE 3051 also applies to interests in jointly controlled enterprises accounted for
using the cost method.
The amendments are proposed to be effective for fiscal years beginning on or after January 1, 2020. Earlier
application will be permitted.
Income Taxes (Proposed amendments to ASPE 3465)
In September 2018, the Accounting Standards Board (AcSB) issued an Exposure Draft (ED) that proposes narrow
scope amendments to revise and update ASPE 3465 Income Taxes. The main features of this ED are:
▪ Removing an example that provides guidance on accounting for eligible capital property.
▪ Removing the requirement to classify future income tax assets and liabilities as current and non-current
when the future income tax method is applied; instead a non-current classification would be required.
▪ Requiring disclosure of the amount of future income tax assets and liabilities for each significant type of
temporary difference for each period presented.
The amendments are proposed to be effective for fiscal years beginning on or after January 1, 2020. Earlier
application will be permitted.
Page 4
This communication contains a general overview of the topic and is current as of September 30, 2018. This information is not a substitute for professional advice and we recommend that any decisions
you take about the application or not of any of the information presented be made in consultation with a qualified professional. Contact your local MNP representative for customized assistance with the
application of this material. MNP LLP accepts no responsibility or liability for any loss related to any person's use of or reliance upon this material. © MNP LLP 2018. All rights reserved.New and Proposed Changes to ASPE Sections for the Two Years Ended
September 30, 2018
Agriculture (Proposed ASPE 3041)
In July 2018, the Accounting Standards Board (AcSB) issued an Exposure Draft (ED) that proposes to issue ASPE
3041 Agriculture to provide guidance to agricultural producers on how to account for agricultural inventories and
productive biological assets, including harvested products of biological assets.
ASPE 3041 proposes to provide guidance on the recognition, measurement, presentation and disclosure of
agricultural inventories and productive biological assets. The main features of this ED are:
▪ Agricultural inventories and productive biological assets must meet the recognition criteria in ASPE 1000
Financial Statement Concepts.
▪ There is a rebuttable presumption that biological assets not used in a productive capacity are agricultural
inventory on initial recognition.
▪ If agricultural inventories are subsequently used in a productive capacity, they are reclassified to productive
biological assets and their carrying value becomes their deemed cost.
▪ Agricultural producers must make an accounting policy choice to measure their agricultural inventories using
either the cost model or net realizable value model when specific conditions are met.
▪ Productive biological assets will be measured at cost less accumulated amortization and impairment, if any.
▪ For agricultural inventories and productive biological assets, agricultural producers will be required to
disclose a qualitative description of the assets, the quantities of the assets held, measurement
methodologies used, carrying amounts of the assets and the related amounts recognized in profit or loss.
▪ Retrospective application would be required in accordance with ASPE 1506 Accounting Changes, with
transitional provisions providing some relief for agricultural producers applying the new standard for the first
time.
ASPE 3041 is proposed to be effective for years beginning on or after January 1, 2021. Earlier application will be
permitted.
Accounting for Related Party Financial Instruments and Significant Risk Disclosures (Proposed
amendments to ASPE 3856)
In October 2017, the Accounting Standards Board (AcSB) issued an Exposure Draft (ED) to amend ASPE 3856
Financial Instruments to address issues relating to the accounting for related party financial instruments and to
clarify the purpose of financial instrument risk disclosures.
The ED proposed limited scope amendments to ASPE 3856 to make clear that ASPE 3856 would apply to the
initial and subsequent measurement, derecognition, presentation and disclosure of related party financial
instruments. Guidance on the modification of related party financial instruments, impairment and forgiveness of
related party financial assets have also been proposed in the ED.
In addition, the ED proposed to modify the significant risk disclosure requirements removing the requirement for
significant risks arising from derivatives to be separately disclosed from other significant risks.
The amendments are proposed to be effective for years beginning on or after January 1, 2020. Earlier application
will be permitted.
Retractable or Mandatorily Redeemable Shares Issued in a Tax Planning Arrangement (Proposed
amendments to ASPE 1591, 3251 and 3856)
In October 2014, the Accounting Standards Board (AcSB) originally issued an Exposure Draft (ED) to amend
ASPE 3856 Financial Instruments to require redeemable preferred shares issued in a tax planning arrangement to
be presented as liabilities.
In response to significant concerns raised by stakeholders, the AcSB continued its deliberations and in September
2017, issued an updated ED to amend ASPE 3856 Financial Instruments for retractable or mandatorily
redeemable shares issued in a tax planning arrangement.
Page 5
This communication contains a general overview of the topic and is current as of September 30, 2018. This information is not a substitute for professional advice and we recommend that any decisions
you take about the application or not of any of the information presented be made in consultation with a qualified professional. Contact your local MNP representative for customized assistance with the
application of this material. MNP LLP accepts no responsibility or liability for any loss related to any person's use of or reliance upon this material. © MNP LLP 2018. All rights reserved.New and Proposed Changes to ASPE Sections for the Two Years Ended
September 30, 2018
The proposed amendments in this updated ED include:
▪ Amending the classification exception to equity in ASPE 3856 to focus on whether control of the enterprise
issuing the shares is retained.
▪ Adding guidance to ASPE 1591 Subsidiaries on assessing the effect of substantive rights in the control
assessment.
▪ Requiring a reassessment of the classification of the retractable or mandatorily redeemable shares issued
in a tax planning arrangement classified as equity only when a subsequent event or transaction occurs that
indicates one or more of the conditions for equity classification may no longer be met.
▪ Requiring reclassification of retractable or mandatorily redeemable shares to financial liabilities when the
conditions for equity classification are no longer met at the reassessment date. Prohibiting retractable or
mandatorily redeemable shares issued in a tax planning arrangement initially classified as financial
liabilities from being subsequently reclassified to equity even if conditions change.
▪ Measuring retractable or mandatorily redeemable shares issued in a tax planning arrangement classified
as financial liabilities at the redemption amount.
▪ Adding guidance in ASPE 3251 Equity to:
▪ Present as a separate component of equity the effect of classifying and measuring the retractable or
mandatorily redeemable shares as financial liabilities, and
▪ Disclose the nature of the separate component of equity.
▪ Requiring retrospective application in accordance with ASPE 1506 Accounting changes, with an option to
not restate comparative financial information.
The amendments are proposed to be effective for years beginning on or after January 1, 2020. Earlier application
will be permitted.
Page 6
This communication contains a general overview of the topic and is current as of September 30, 2018. This information is not a substitute for professional advice and we recommend that any decisions
you take about the application or not of any of the information presented be made in consultation with a qualified professional. Contact your local MNP representative for customized assistance with the
application of this material. MNP LLP accepts no responsibility or liability for any loss related to any person's use of or reliance upon this material. © MNP LLP 2018. All rights reserved.And Proud of it!
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