ISSUED. December December September ISSUED. September

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1 New and Proposed Changes to ASPE Sections for the Two Years Ended

2 NEW AND AMENDED STANDARDS 2015 Improvements to Accounting Standards for Private Enterprises (Amendment) 2017 Annual Improvements to Accounting Standards for Private Enterprises (Amendment) ASPE 1591 Subsidiaries (New) ASPE 1591 Subsidiaries and 3051 Investments (Amendment) ASPE 1591 Subsidiaries and 3056 Interests in Joint Arrangements (Amendment) ASPE 3051 Investments (Amendment) ASPE 3056 Interests in Joint Arrangements (New) DATE ISSUED October 2015 July 2017 September 2014 December 2016 December 2016 September 2014 September 2014 EFFECTIVE DATE January 1, Early application is permitted. Effective for fiscal years beginning on or after January 1, Early application is permitted. January 1, Early application is permitted. January 1, Early application is permitted. January 1, 2017 for amendments to ASPE 1591 and January 1, 2018 for amendments to ASPE Early application is permitted. January 1, Early application is permitted only if ASPE 3056 is applied at the same time. January 1, Early application is permitted only if the guidance in ASPE is applied at the same time. EXPOSURE DRAFTS Retractable or Mandatorily Redeemable Shares Issued in a Tax Planning Arrangement (Proposed amendments to Sections 1591, 3251 and 3856) DATE ISSUED September 2017 EFFECTIVE DATE Proposed to be effective for fiscal years beginning on or after January 1, Early application is permitted. This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon 2

3 New and Amended Standards 2015 Improvements to Accounting Standards for Private Enterprises (Amendment) In October 2015, 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 1582 Business Combinations Addition of a new disclosure requirement related to a business combination achieved through the acquisition of an asset or group of assets. Specifically, the entity must disclose the amounts recognized as of the acquisition date for each major class of assets acquired and liabilities assumed. ASPE 3051 Investments New requirement to disclose the amount of any impairment loss or reversal of a previously recognized impairment loss. ASPE 3061 Property, Plant and Equipment Removal of the words an item of property, plant and equipment from the disclosure requirements. ASPE 3065 Leases New requirement for the lessor to disclose the amount of any impairment loss or reversal of a previously recognized impairment loss on a direct financing, sales-type or operating lease. ASPE 3462 Employee Future Benefits Clarifies when an enterprise can use a funding valuation to measure the defined benefit obligation for a defined benefit plan. All of the above amendments are effective for periods beginning on or after January 1, Early application is permitted 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. This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon 3

4 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, Early application is permitted. ASPE 1591 Subsidiaries (New) In September 2014, the Accounting Standards Board (AcSB) issued ASPE 1591, which replaces ASPE 1590 Subsidiaries and ASPE AcG-15 Consolidation of Variable Interest Entities. ASPE 1591 includes additional guidance to determine when control is obtained through means other than equity interests. The guidance from ASPE 1590 on accounting for subsidiaries controlled through equity interests has been retained. The following summarizes the additional guidance in ASPE 1591: Explanations of how to apply the existing definitions of a subsidiary and control of an enterprise when the rights of equity interests may not be the dominant factor in determining who controls an enterprise. Descriptions of the types of contractual arrangements that may give one enterprise control over another. Other facts and circumstances to consider when assessing whether an enterprise has control over another enterprise. Guidance to distinguish rights that are designed to protect the interest of the enterprise holding those rights without giving it control from rights that do confer control. Significant consequential amendments include changes to: ASPE 1500 First-time Adoption, to permit a first-time adopter to apply the transitional provisions in ASPE 1591 if it chooses to consolidate its subsidiaries for the first time. ASPE 1601 Consolidated Financial Statements, to move guidance on how to consolidate from ASPE 1590 to ASPE The new Section is effective for periods beginning on or after January 1, 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 to this Section: 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. This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon 4

5 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. 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 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, 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 this Section clarify that: The transitional provisions in ASPE ASPE 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, Early application is permitted. ASPE 3056 Interests in Joint Arrangements Amended to clarify that the transitional provisions in paragraphs ASPE 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, Early application is permitted. This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon 5

6 ASPE 3051 Investments (Amendment) In September 2014, the Accounting Standards Board (AcSB) issued amendments to ASPE 3051 to clarify that the scope includes investments subject to significant influence and certain other non-financial instrument investments (such as works of art and other tangible assets held for investment purposes), but does not include other investments (such as subsidiaries and interests in joint arrangements). The amendments also provide guidance on contributions and other transactions between an investor and an equity-accounted investee. Significant consequential amendments include changes to: ASPE 1500 First-time Adoption, to permit a first-time adopter to apply the transitional provisions in amended ASPE ASPE 3831 Non-monetary Transactions, to refer to ASPE 3051 on accounting for gains or losses from nonmonetary transactions. The amendments are effective for periods beginning on or after January 1, 2016 and may be applied prospectively. Early application is permitted only if ASPE 3056 Interests in Joint Arrangements is applied at the same time. ASPE 3056 Interests in Joint Arrangements (New) In September 2014, the Accounting Standards Board (AcSB) issued ASPE 3056 which replaces ASPE 3055 Interests in Joint Ventures. Under ASPE 3056, the accounting by an investor for an interest in a joint arrangement is driven by whether it is an interest in jointly controlled operations or assets, or a jointly controlled enterprise. Investors with interests in jointly controlled operations or assets recognize their share of jointly controlled assets, liabilities, revenues and expenses. Investors with interests in jointly controlled enterprises have a choice to account for the investments using the equity or cost method, or perform additional analysis of its interests in jointly controlled enterprises to determine whether they represent rights to individual assets and liabilities, or net assets. For interests in individual assets and liabilities, the investor recognizes its share of the jointly controlled assets, liabilities, revenues and expenses. For interests in net assets, the investor accounts for its interests using the equity or cost method. The new Section is effective for periods beginning on or after January 1, Early application is permitted only if the guidance in ASPE Investments is applied at the same time. This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon 6

7 Exposure Drafts Retractable or Mandatorily Redeemable Shares Issued in a Tax Planning Arrangement (Proposed amendments to Sections 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. 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, Earlier application will be permitted. This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon 7

8 ABOUT MNP MNP is one of the largest chartered accountancy and business consulting firms in Canada, with offices in urban and rural centres across the country positioned to serve you better. Working with local team members, you have access to our national network of professionals as well as strategic local insight to help you meet the challenges you face every day and realize what s possible. Visit us at MNP.ca Praxity, AISBL, is a global alliance of independent firms. Organised as an international not-for-profit entity under Belgium law, Praxity has its administrative office in London. As an alliance, Praxity does not practice the profession of public accountancy or provide audit, tax, consulting or other professional services of any type to third parties. The alliance does not constitute a joint venture, partnership or network between participating firms. Because the alliance firms are independent, Praxity does not guarantee the services or the quality of services provided by participating firms.