DATE ISSUED IASB AcSB

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

2 NEW AND AMENDED STANDARDS DATE ISSUED IASB AcSB EFFECTIVE DATE Annual Improvements to IFRSs Cycle (Amendment) September 2014 August 2015 on or after January 1, Early Annual Improvements to IFRSs Cycle (Amendment) December 2016 March 2017 on or after January 1, 2018, with the exception of amendments to IFRS 12, which are effective for annual periods beginning on or after January 1, IFRS 2 Share-based Payment (Amendment) June 2016 November 2016 Amendment, clarifying how to account for certain types of share-based payment transactions, is effective for annual periods beginning on or after January 1, Earlier application is IFRS 4 Insurance Contracts (Amendment) September 2016 January 2017 Amendment to address concerns arising from the implementation of the new IFRS 9 Financial Instruments standard. Effective for annual periods beginning on or after January 1, 2018 or at the time IFRS 9 is implemented. IFRS 9 Financial Instruments (New) July 2014 February 2015 on or after January 1, Early IFRS 10 Consolidated Financial Statements and IAS 28 (Revised) Investments in Associates and Joint Ventures (Amendment) September 2014 November 2014 Effective date for these amendments is deferred indefinitely. Earlier application is still IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities and IAS 28 (Revised) Investments in Associates and Joint Ventures (Amendment) December 2014 April 2015 on or after January 1, Early IFRS 11 Joint Arrangements (Amendment) IFRS 14 Regulatory Deferral Accounts (New) May 2014 July 2014 on or after January 1, Early January 2014 April 2014 on or after January 1, Earlier This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon the 2

3 NEW AND AMENDED STANDARDS DATE ISSUED IASB AcSB EFFECTIVE DATE IFRS 15 Revenue from Contracts with Customers (New) May 2014 February 2015 on or after January 1, Earlier IFRS 15 Revenue from Contracts with Customers (Amendment) April 2016 August 2016 Amendment clarifying some requirements and providing additional transitional relief. Effective the same date as the Standard. IFRS 16 Leases (New) January 2016 June 2016 on or after January 1, Earlier application is permitted for entities that also apply IFRS 15. IFRS 17 Insurance Contracts (New) May 2017 on or after January 1, Earlier application is permitted for entities that also apply IFRS 9 and IFRS 15. IAS 1 Presentation of Financial Statements (Amendment) December 2014 April 2015 on or after January 1, Earlier IAS 7 Statement of Cash Flows (Amendment) January 2016 April 2016 on or after January 1, Earlier IAS 12 Income Taxes (Amendment) January 2016 April 2016 on or after January 1, Earlier IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets (Amendment) May 2014 July 2014 Amendment, clarifying acceptable methods of depreciation and amortization, is effective for annual periods beginning on or after January 1, Earlier application is IAS 16 Property, Plant and Equipment and IAS 41 Agriculture (Amendment) June 2014 September 2014 on or after January 1, Earlier IAS 27 (Revised) Separate Financial Statements (Amendment) August 2014 November 2014 on or after January 1, Earlier This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon the 3

4 NEW AND AMENDED STANDARDS DATE ISSUED IASB AcSB EFFECTIVE DATE IAS 40 Investment Property (Amendment) December 2016 March 2017 on or after January 1, Earlier IFRIC 22 Foreign Currency Transactions and Advance Consideration (New) December 2016 March 2017 on or after January 1, Earlier IFRIC 23 Uncertainty over Income Tax Treatments June 2017 September 2017 on or after January 1, Earlier This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon the 4

5 EXPOSURE DRAFTS Accounting Policies and Accounting Estimates (Proposed Amendments to IAS 8) Definition of Material (Proposed Amendments to IAS 1 and IAS 8) Property, Plant and Equipment Proceeds before Intended Use (Proposed Amendments to IAS 16) Prepayment Features with Negative Compensation (Proposed Amendments to IFRS 9) Improvements to IFRS 8 Operating Segments (Proposed Amendments to IFRS 8 and IAS 34) Annual Improvements to IFRSs Cycle (Amendment) Definition of a Business and Accounting for Previously Held Interests (Proposed Amendments to IFRS 3 and IFRS 11) DATE ISSUED IASB September 2017 September 2017 June 2017 April 2017 March 2017 January 2017 June 2016 No date yet specified No date yet specified. No date yet specified. EFFECTIVE DATE Tentatively determined to be effective for annual periods beginning on or after January 1, Earlier No date yet specified. IAS 28 proposed amendments to be effective for annual periods beginning on or after January 1, 2018, with earlier application All other proposed amendments tentatively determined to be effective for annual periods beginning on or after January 1, 2019, with earlier application Tentatively determined to be effective for annual periods beginning on or after January 1, Earlier Remeasurement on a Plan Amendment, Curtailment or Settlement/Availability of a Refund from a Defined Benefit Plan (Proposed Amendments to IAS 19 and IFRIC 14) June 2015 No date yet specified for IFRIC 14 amendments. IAS 19 proposed amendments tentatively determined to be effective for annual periods beginning on or after January1, Conceptual Framework for Financial Reporting May 2015 No date yet specified. Classification of Liabilities (Proposed Amendments to IAS 1) February 2015 No date yet specified. This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon the 5

6 New and Amended Standards Annual Improvements to IFRSs Cycle (Amendment) In September 2014, the International Accounting Standards Board (IASB) issued a series of amendments to IFRSs, incorporated into Part I of the CPA Canada Handbook Accounting by the Accounting Standards Board (AcSB) in February 2015, in response to issues addressed during the cycle. The amendments are summarized below: IFRS 5 Non-current Assets Held for Sale and Discontinued Operations Amendments to clarify the accounting for a change in disposal plan from a plan to sell a non-current asset (or disposal group) to a plan to distribute a non-current asset (or disposal group), and provide guidance in IFRS 5 for the discontinuation of held-for-distribution accounting. IFRS 7 Financial Instruments: Disclosures Amendments to clarify how an entity should apply financial instruments transfer of financial assets guidance to a servicing contract. In general, servicing contracts meet the definition of continuing involvement for the purposes of applying the disclosure requirements. IAS 19 Employee Benefits Amendments to clarify that the high quality corporate bonds used to estimate the discount rate for post-employment benefit obligations should be denominated in the same currency as the liability. In the absence of availability of high quality corporate bond rates, government bonds denominated in the same currency shall be used. IAS 34 Interim Financial Reporting Amendments to clarify the meaning of disclosure of information elsewhere in the interim financial report. This means that it should be contained within the interim financial statements or incorporated by cross-reference from the interim financial statements to another section of the interim financial report that is available to users of the interim financial statements on the same terms as the interim financial statements and at the same time. The amendments above are effective for annual periods beginning on or after January 1, Early application is Annual Improvements to IFRSs Cycle (Amendment) In December 2016, the International Accounting Standards Board (IASB) issued a series of amendments to IFRSs, incorporated into Part I of the CPA Canada Handbook Accounting by the Accounting Standards Board (AcSB) in March 2017, in response to issues addressed during the cycle. The amendments are summarized below: IFRS 1 First-time Adoption of International Financial Reporting Standards Amendments delete the short-term exemptions from the IFRSs contained in Appendix E, as the reliefs provided had been available to entities only for reporting periods that had passed. IFRS 12 Disclosure of Interests in Other Entities Amendments clarify the scope of the standard by specifying that the disclosure requirements in the standard, except for those in certain paragraphs, apply to an entity s interests that are classified as held for sale, as held for distribution to owners or as discontinued operations in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. IAS 28 Investments in Associates and Joint Ventures Amendments clarify that the election to measure at fair value through profit or loss an investment in an associate or joint venture that is held by an entity that is a venture capital organization, or other qualifying entity, is available for each investment in an associate or joint venture on an investment-by-investment basis, upon initial recognition. This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon the 6

7 The amendments above are effective for annual periods beginning on or after January 1, 2018, with the exception of amendments to IFRS 12, which are effective for annual periods beginning on or after January 1, IFRS 2 Share-based Payment (Amendment) In June 2016, the International Accounting Standards Board (IASB) issued amendments to IFRS 2, incorporated into Part I of the CPA Canada Handbook Accounting by the Accounting Standards Board (AcSB) in November 2016, to clarify how to account for certain types of share-based payment transactions. The amendments provide requirements on the accounting for: The effects of vesting and non-vesting conditions on measurement of cash-settled share-based payments; Share-based payment transactions with a net settlement feature for withholding tax obligations; and A modification to the terms and conditions of a share-based payment that changes the classification of the transaction from cash-settled to equity-settled. The amendments are effective for annual periods beginning on or after January 1, Earlier application is IFRS 4 Insurance Contracts (Amendment) In September 2016, the International Accounting Standards Board (IASB) issued amendments to IFRS 4, incorporated into Part I of the CPA Canada Handbook Accounting by the Accounting Standards Board (AcSB) in January The amendments address the concerns created by the implementation of IFRS 9 Financial Instruments before an entity has implemented the replacement Standard being developed for IFRS 4. The amendment provides two voluntary approaches to deal with the transition to IFRS 9: Overlay approach provides all entities that issue insurance contracts the choice to recognize, in comprehensive income instead of profit and loss, the volatility that may arise from implementing IFRS 9 before the new insurance contract standard is available. Deferral approach provides entities that have activities predominantly connected with insurance the option to temporarily apply an exemption from IFRS 9 (until 2021). Entities applying this exemption will continue to apply IAS 39 Financial Instruments. The amendments to IFRS 4 for entities applying the deferral approach are effective for annual periods beginning on or after January 1, The amendments for entities applying the overlay approach are effective at the time IFRS 9 is implemented. IFRS 9 Financial Instruments (New) In July 2014, the International Accounting Standards Board (IASB) issued the complete and final version of IFRS 9 (2014), which was incorporated into Part I of the CPA Canada Handbook Accounting by the Accounting Standards Board (AcSB) in February IFRS 9 (2014) supersedes all previous versions including IFRS 9 (2009), IFRS 9 (2010) and IFRS 9 (2013). This new standard will replace IAS 39 Financial Instruments: Recognition and Measurement, effective for reporting periods beginning on or after January 1, Earlier The key features of IFRS 9 (2014) are as follows: Classification and measurement Financial assets are initially measured at fair value plus, in the case of those not subsequently measured at fair value through profit or loss, transaction costs. Financial assets are classified based on both a business model test and a cash flow characteristics test into one of three subsequent measurement categories: amortized cost, fair value through other comprehensive income, or fair value through profit or loss. This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon the 7

8 Investments in equity instruments, including those without a reliably determinable fair value, are classified as at fair value through profit or loss. However, investments in equity instruments not held for trading may be irrevocably designated as fair value through other comprehensive income with only dividends recognized in profit or loss. When designating a financial liability at fair value, changes in fair value resulting from changes in the liability s credit risk are presented in other comprehensive income unless doing so would create or enlarge an accounting mismatch in profit or loss. Embedded derivatives within host contracts that are financial assets within the scope of IFRS 9 are not separated (or bifurcated) from the host contract, but rather, the entire hybrid contract is assessed for classification into a measurement category. Reclassification of financial assets is permitted only when an entity changes its business model for managing financial assets, and is prohibited for financial liabilities. Impairment A single model is applied for recognizing impairment losses on financial assets, including trade receivables, contract assets, and certain financial guarantee contracts and loan commitments, that will result in an earlier, more timely recognition of expected credit losses. Equity investments and other financial assets classified as subsequently measured at fair value through profit or loss, or equity investments elected to be measured at fair value through other comprehensive income, are not assessed for impairment. Impairment losses are no longer recognized when incurred, but rather, a forward-looking expected credit loss model is used to recognize losses expected to occur over the contractual life of the financial asset. The loss allowance is measured at lifetime expected credit losses for financial assets for which there have been significant increases in credit risk since initial recognition or for which a simplified approach is applied. Allowances on all other financial assets subject to the impairment requirements are based on 12-month expected credit losses. Increased disclosure of an entity s exposure to credit risk is required for financial instruments subject to the impairment requirements of IFRS 9. Hedge accounting On initial application of IFRS 9, an entity may choose to continue applying the hedge accounting requirements of IAS 39, instead of IFRS 9, to all hedging relationships. The new hedge accounting model under IFRS 9 introduces more principle-based requirements and grants entities greater flexibility in applying hedge accounting to its risk management activities. The previous 80/125 hedge effectiveness requirements are no longer used; instead, the entity must be able to demonstrate an economic relationship between the hedged items and hedging instruments used. As the economic relationship or hedging activities of an entity changes, the hedge relationships must be rebalanced by changing the quantities of the hedged items or hedging instruments used. This eliminates the need to discontinue hedge accounting and commence a new hedging relationship. Hedge accounting can only be discontinued when the qualifying criteria are no longer met. Regardless of the standard under which hedge accounting is applied, enhanced disclosures surrounding an entity s risk management activities are required. This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon the 8

9 IFRS 10 Consolidated Financial Statements and IAS 28 (Revised) Investments in Associates and Joint Ventures (Amendment) In September 2014, the International Accounting Standards Board (IASB) issued amendments to IFRS 10 and IAS 28, incorporated into Part I of the CPA Canada Handbook - Accounting by the Accounting Standards Board (AcSB) in November The amendments address an inconsistency between the requirements in IFRS 10 and IAS 28 in dealing with the sale or contribution of a subsidiary by an investor to an associate or joint venture. The amendments require sales or contributions of assets that constitute a business to be accounted for in accordance with the requirements of IFRS 10 (i.e., full gain or loss recognition). All other sales or contributions of assets would be accounted for in accordance with the requirements of IAS 28 (i.e., gain or loss recognition limited to the extent of the unrelated investors interests in the associate or joint venture). In December 2015, the IASB decided to defer the effective date of these amendments until its research project on the equity method has been concluded. Earlier application of the amendments is still IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities and IAS 28 (Revised) Investments in Associates and Joint Ventures (Amendment) In December 2014, the International Accounting Standards Board (IASB) issued amendments to IFRS 10, IFRS 12 and IAS 28 which were incorporated into Part I of the CPA Canada Handbook Accounting by the Accounting Standards Board (AcSB) in April The amendments provide the following clarifications to the requirements when accounting for investment entities: The exemption from preparing consolidated financial statements for an intermediate parent entity is available to a parent entity that is a subsidiary of an investment entity, even if the investment entity measures all of its subsidiaries at fair value; A subsidiary that provides services related to the parent s investment activities should not be consolidated if the subsidiary itself is an investment entity; When applying the equity method to an associate or a joint venture, a non-investment entity investor of an investment entity may retain the fair value measurement applied by the associate or joint venture to its interests in subsidiaries; and An investment entity measuring all of its subsidiaries at fair value provides the disclosures relating to investment entities required by IFRS 12. The amendments are effective for annual periods beginning on or after January 1, Earlier application is IFRS 11 Joint Arrangements (Amendment) In May 2014, the International Accounting Standards Board (IASB) issued amendments to this standard which were incorporated into Part I of the CPA Canada Handbook Accounting by the Accounting Standards Board (AcSB) in July The amendments clarify that the acquirer of an interest in a joint operation in which the activity constitutes a business, as defined in IFRS 3 Business Combinations, is required to apply all of the principles on business combinations accounting in IFRS 3 and other IFRSs with the exception of those principles that conflict with the guidance in IFRS 11. The amendments apply to the acquisition of an interest in a joint operation on its formation, unless the formation of the joint operation coincides with the formation of the business, and the acquisition of additional interests in the same joint operation. These amendments should be applied prospectively for annual periods beginning on or after January 1, Earlier This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon the 9

10 IFRS 14 Regulatory Deferral Accounts (New) In January 2014, the International Accounting Standards Board (IASB) issued a new interim standard, incorporated into Part I of the CPA Canada Handbook Accounting by the Accounting Standards Board (AcSB) in April 2014, to specify the financial reporting requirements for regulatory deferral account balances that arise when an entity provides goods or services to customers at a price or rate that is subject to rate regulation. IFRS 14 permits first-time adopters to continue to recognize amounts related to rate regulation in accordance with their previous generally accepted accounting principles (GAAP) requirements when they adopt International Financial Reporting Standards (IFRS). However, to enhance comparability with entities that already apply IFRS and do not recognize such amounts, the standard requires that the effect of rate regulation be presented separately from other items. Additional disclosure is required in regards to the nature and risks associated with the rate regulation that has resulted in the recognition of a regulatory deferral account balance. This standard is effective for annual periods beginning on or after January 1, Early IFRS 15 Revenue from Contracts with Customers (New) In May 2014, the International Accounting Standard Board (IASB) issued a new International Financial Reporting Standard (IFRS) on the recognition of revenue from contracts with customers which was incorporated into Part I of the CPA Canada Handbook Accounting by the Accounting Standards Board (AcSB) in February IFRS 15 specifies how and when entities recognize revenue, as well as requires more detailed and relevant disclosures. IFRS 15 supersedes IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18 Transfers of Assets from Customers and SIC-31 Revenue Barter Transactions Involving Advertising Services. The Section provides a single, principles based five-step model to be applied to all contracts with customers, with certain exceptions. The five steps are: Identify the contract(s) with the customer. Identify the performance obligation(s) in the contract. Determine the transaction price. Allocate the transaction price to each performance obligation in the contract. Recognize revenue when (or as) the entity satisfies a performance obligation. The standard is effective for annual periods beginning on or after January 1, Earlier IFRS 15 Revenue from Contracts with Customers (Amendment) In April 2016, the International Accounting Standard Board (IASB) issued amendments to IFRS 15, incorporated into Part I of the CPA Canada Handbook Accounting by the Accounting Standards Board (AcSB) in August 2016, to clarify some requirements and provide additional transitional relief for entities implementing IFRS 15. The amendments clarify how to: Identify a performance obligation (the promise to transfer a good or a service to customer) in a contract; Determine whether a company is a principal (the provider of a good or service) or an agent (responsible for arranging for the good or service to be provided); and Determine whether the revenue from granting a license should be recognized at a point in time or over time. The amendments also include two additional reliefs to reduce cost and complexity for an entity when it first applies IFRS 15. The amendments are effective for annual periods beginning on or after January 1, Earlier application is This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon the 10

11 IFRS 16 Leases (New) In January 2016, the International Accounting Standards Board (IASB) issued a new International Financial Reporting Standard (IFRS) on lease accounting which was incorporated into Part I of the CPA Canada Handbook Accounting by the Accounting Standards Board (AcSB) in June IFRS 16 supersedes IAS 17 Leases, IFRIC 4 Determining Whether an Arrangement Contains a Lease, SIC-15 Operating Leases Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. IFRS 16 introduces a single lessee accounting model that requires a lessee to recognize assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. Lease assets and liabilities are initially recognized on a present value basis and subsequently, similarly to other non-financial assets and financial liabilities, respectively. The lessor accounting requirements are substantially unchanged and, accordingly, continue to require classification and measurement as either operating or finance leases. The new standard also introduces detailed disclosure requirements for both the lessee and lessor. The new standard is effective for annual periods beginning on or after January 1, Earlier application is permitted for entities that also apply IFRS 15 Revenue from Contracts with Customers. IFRS 17 Insurance Contracts (New) In May 2017, the International Accounting Standards Board (IASB) issued a new International Financial Reporting Standard (IFRS) on insurance contracts which has not yet been incorporated into Part I of the CPA Canada Handbook Accounting by the Accounting Standards Board (AcSB). IFRS 17 supersedes IFRS 4 Insurance Contracts, which was issued as an interim standard in 2004 and allowed entities to account for insurance contracts using a wide variety of accounting practices. IFRS 17 introduces a single principle-based standard to account for all types of insurance contracts to enhance the comparability of financial reporting between entities. The new standard provides guidance on the recognition, measurement, presentation and disclosure of insurance contracts issued. The main features of IFRS 17 include: Recognition and measurement of groups of insurance contracts as a combination of the current measurement of the future cash flows and the expected profit over the period that services are provided under the contracts Recognition of profit from a group of insurance contracts over the period the entity provides insurance coverage and as the entity is released from risk, with immediate recognition of a loss if a group of contracts is or becomes loss-making; Separate presentation of insurance revenue, insurance service expenses and insurance finance income or expenses; An accounting policy choice to either recognize all insurance finance income or expenses for the reporting period in profit or loss, or a portion of insurance finance income or expenses in comprehensive income; and An optional simplified measurement approach, the premium allocation approach, for simpler insurance contracts. The new standard is effective for annual periods beginning on or after January 1, Earlier application is permitted for entities that also apply IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers. IAS 1 Presentation of Financial Statements (Amendment) In December 2014, the International Accounting Standards Board (IASB) issued amendments to IAS 1, incorporated into Part I of the CPA Canada Handbook Accounting by the Accounting Standards Board (AcSB) in April The amendments are part of the IASB s Disclosure Initiative to address some of the concerns expressed about existing presentation and disclosure requirements and to ensure entities are able to use judgment when preparing their financial statements. The amendments are summarized below. This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon the 11

12 Materiality: Clarify that entities shall not aggregate or disaggregate information in a manner that obscures useful information; Clarify that materiality requirements apply to the statements of profit or loss and other comprehensive income, statement of financial position, statement of cash flows and statements of changes in equity, and to the notes; and Clarify that when a standard requires a specific disclosure, the resulting information shall be assessed to determine whether it is material and consequently whether presentation or disclosure of that information is warranted. Presentation of statements of financial position and profit or loss and other comprehensive income: Clarify that the list of line items to be presented in these statements can be disaggregated and aggregated as relevant and additional guidance on subtotals in these statements; and Clarify that an entity s share of OCI of equity-accounted associates and joint ventures should be presented in aggregate as single line items based on whether or not it will be subsequently reclassified to profit or loss. Notes: Clarify that entities have flexibility as to the order in which they present the notes, but also emphasize that understandability and comparability should be considered by an entity when deciding that order; and Remove potentially unhelpful guidance in IAS 1 for identifying a significant accounting policy. These amendments are effective for annual periods beginning on or after January 1, Earlier application is IAS 7 Statement of Cash Flows (Amendment) In January 2016, the International Accounting Standards Board (IASB) issued amendments to IAS 7 which were incorporated into Part I of the CPA Canada Handbook Accounting by the Accounting Standards Board (AcSB) in April The amendments are part of the IASB s Disclosure Initiative to address some of the concerns expressed about existing presentation and disclosure requirements. The amendments require entities to provide disclosures that enable users of the financial statements to evaluate both cash flow and non-cash changes in liabilities arising from financing activities. These amendments are effective for annual periods beginning on or after January 1, Earlier application is IAS 12 Income Taxes (Amendment) In January 2016, the International Accounting Standards Board (IASB) issued amendments to IAS 12 which were incorporated into Part I of the CPA Canada Handbook Accounting by the Accounting Standards Board (AcSB) in April The amendments clarify how to account for deferred tax assets related to debt instruments measured at fair value. The amendments clarify the following aspects around the recognition of deferred tax assets for unrealized losses: Decreases in the carrying amount of a fixed-rate debt instrument for which the principal is paid on maturity give rise to a deductible temporary difference if the debt instrument is measured at fair value and its tax base remains at cost. An entity s estimate of future taxable profit may include amounts from assets it expects to recover in excess of their carrying amounts if there is sufficient evidence that it is probable the entity will achieve this. An entity s estimate of future taxable profit excludes tax deductions resulting from the reversal of deductible temporary differences. An entity assesses whether to recognize the tax effect of a deductible temporary difference as a deferred tax asset in combination with other deferred tax assets. If tax law restricts the utilization of tax losses so that an This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon the 12

13 entity can only deduct tax losses against income of a specified type(s) (e.g. if it can deduct capital losses only against capital gains), the entity must still recognize a deferred tax asset in combination with other deferred tax assets, but only with deferred tax assets of the appropriate type. These amendments are effective for annual periods beginning on or after January 1, Earlier application is IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets (Amendment) The amendments to IAS 16 and IAS 38, issued by the International Accounting Standards Board (IASB) in May 2014 and incorporated into Part I of the CPA Canada Handbook Accounting by the Accounting Standards Board (AcSB) in July 2014, clarify that the use of revenue-based methods to calculate the depreciation of an asset is not appropriate. Amendments to IAS 38 specify that an amortization method based on revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset. The amendments are effective for annual periods beginning on or after January 1, Earlier application is IAS 16 Property, Plant and Equipment and IAS 41 Agriculture (Amendment) The amendments to IAS 16 and IAS 41, issued by the International Accounting Standards Board (IASB) in June 2014 and incorporated into Part I of the CPA Canada Handbook Accounting by the Accounting Standards Board (AcSB) in September 2014, cause bearer plants, which are used solely to grow produce rather than sold as a living plant or harvested, to fall within the scope of IAS 16. As mature bearer biological assets no longer undergo significant biological transformation, their operation is similar to that of manufacturing. Consequently, these assets should be accounted for in the same way as property, plant and equipment. The amendments are effective for annual periods beginning on or after January 1, Earlier IAS 27 (Revised) Separate Financial Statements (Amendment) In August 2014, the International Accounting Standards Board (IASB) issued amendments to IAS 27, incorporated into Part I of the CPA Canada Handbook Accounting by the Accounting Standards Board (AcSB) in November 2014, to allow application of the equity method to account for investments in subsidiaries, joint ventures and associates in an entity s separate financial statements. These amendments are effective for annual periods beginning on or after January 1, Early application is IAS 40 Investment Property (Amendment) In December 2016, the International Accounting Standards Board (IASB) issued amendments to IAS 40, incorporated into Part I of the CPA Canada Handbook Accounting by the Accounting Standards Board (AcSB) in March 2017, to provide guidance on transfers of property under construction or development that was previously classified as inventory to, or from, investment properties. The amendments clarify that such a transfer should only be made when there has been a change in use of the property supported by evidence. Further, a change in management s intentions for the use of property by itself does not constitute evidence of a change in use. These amendments are effective for annual periods beginning on or after January 1, Earlier application is IFRIC 22 Foreign Currency Transactions and Advance Consideration (New) In December 2016, the International Accounting Standards Board (IASB) issued a new International Financial Reporting Interpretations Committee (IFRIC) interpretation, incorporated into Part I of the CPA Canada Handbook Accounting by the Accounting Standards Board (AcSB) in March 2017, on accounting for transactions that include the receipt or payment of advance consideration in a foreign currency. The interpretation covers foreign currency transactions when an entity recognises a non-monetary asset or non-monetary liability arising from the This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon the 13

14 payment or receipt of advance consideration before the entity recognises the related asset, expense or income. The following consensuses were arrived at regarding this issue: The date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the non-monetary prepayment asset or deferred income liability; and, If there are multiple payments or receipts in advance, a date of transaction is established for each payment or receipt. The new interpretation is effective for annual periods beginning on or after January 1, Earlier application is IFRIC 23 Uncertainty over Income Tax Treatments (New) In June 2017, the International Accounting Standards Board (IASB) issued a new International Financial Reporting Interpretations Committee (IFRIC) interpretation, incorporated into Part I of the CPA Canada Handbook Accounting by the Accounting Standards Board (AcSB) in September 2017, to specify how to reflect the effects of uncertainty in accounting for income taxes. IAS 12 Income Taxes provides requirements on the recognition and measurement of current or deferred income tax liabilities and assets. However, it does not provide a specific requirement for the accounting for income tax when the application of tax law to a particular transaction or circumstance is uncertain. As a result, the interpretation aims to reduce the diversity in how entities recognise and measure a tax liability or tax asset when there is uncertainty over income tax treatments. The new interpretation is effective for annual periods beginning on or after January 1, Earlier application is This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon the 14

15 Exposure Drafts Accounting Policies and Accounting Estimates (Proposed Amendments to IAS 8) In September 2017, the International Accounting Standards Board (IASB) published an Exposure Draft (ED), Accounting Policies and Accounting Estimates. The proposed amendments will help entities distinguish accounting policies from accounting estimates. The proposed amendment would clarify: How accounting policies and accounting estimates relate to each other, by: (i) Explaining that accounting estimates are used in applying accounting policies; and (ii) Making the definition of accounting policies clearer and more concise; That selecting an estimation technique, or valuation technique, used when an item in the financial statements cannot be measured with precision, constitutes making an accounting estimate; and That, in applying IAS 2 Inventories, selecting the first-in, first-out (FIFO) cost formula or the weighted average cost formula for interchangeable inventories constitutes selecting an accounting policy. An effective date for the proposed amendments has not yet been determined. Definition of Material (Proposed Amendments to IAS 1 and IAS 8) In September 2017, the International Accounting Standards Board (IASB) published an Exposure Draft (ED), Definition of Material. The ED proposes amendments to refine the definition of material and clarify its application to: Align the wording of the definition in IFRS standards and the definition in the Conceptual Framework; Incorporate some of the existing supporting requirements in IAS 1 into the definition to give them additional prominence; and Improve the clarity of the explanation accompanying the definition of material. In September 2017, the IASB also issued IFRS Practice Statement 2: Making Materiality Judgements as part of a separate project to provide entities with guidance on making materiality judgements when preparing general purpose financial statements in accordance with IFRS. If changes are made to the definition of material in IAS 1 and IAS 8 as a result of the Definition of Material ED, the IASB will amend IFRS Practice Statement 2 and the forthcoming revised Conceptual Framework. An effective date for the proposed amendments has not yet been determined. Property, Plant and Equipment - Proceeds before Intended Use (Proposed Amendments to IAS 16) In June 2017, the International Accounting Standards Board (IASB) published an Exposure Draft (ED), Property, Plant and Equipment Proceeds before Intended Use. The proposed amendments will prohibit an entity from deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be available for use. Instead, the proceeds from selling such items, and the costs of producing those items, would be recognized in profit or loss. An effective date for the proposed amendments has not yet been determined. Prepayment Features with Negative Compensation (Proposed Amendments to IFRS 9) In April 2017, the International Accounting Standards Board (IASB) published an Exposure Draft (ED), Prepayment Features with Negative Compensation to address concerns on how IFRS 9 Financial Instruments classifies certain prepayable financial assets. The proposed amendments would result in a narrow exception to IFRS 9 for particular financial assets that would otherwise have contractual cash flows that are solely payments of principal and interest but do not meet that condition only as a result of a prepayment feature. Under the proposal, some such prepayable financial assets This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon the 15

16 would be eligible to be measured at either amortized cost or fair value through other comprehensive income, subject to the assessment of the business model in which they are held, if certain conditions are met. In July 2017, the IASB tentatively determined that the amendments will be effective for annual periods beginning on or after January 1, 2019, with earlier application Improvements to IFRS 8 Operating Segments (Proposed Amendments to IFRS 8 and IAS 34) In March 2017, the International Accounting Standards Board (IASB) published an Exposure Draft (ED), Improvements to IFRS 8 Operating Segments. The ED proposes amendments to: Emphasize that the chief operating decision maker is a function that makes operating decisions and decisions about allocating resources to, and assessing the performance of, an entity s operating segments; Add to the existing requirements an explanation that the chief operating decision maker may be either an individual or a group; Explain the role of non-executive members when identifying an entity s chief operating decision maker; Require disclosure of the title and description of the role of the individual or group identified as the chief operating decision maker; Require an explanation in the notes to the financial statements when segments identified by an entity differ between the financial statements and other parts of its annual reporting package; Add further examples of similar economic characteristics to the aggregation criteria in paragraph 12A of IFRS 8; Clarify that an entity may disclose segment information in addition to that reviewed by, or regularly provided to, the chief operating decision maker if that helps the entity to meet the core principle in paragraphs 1 and 20 of the IFRS 8; and, Clarify that the explanations of reconciling items shall be given with sufficient detail to enable users of the financial statements to understand the nature of the reconciling items. The IASB also proposes to amend IAS 34 Interim Financial Reporting to require that in the first interim report after a change in the composition of an entity s reportable segments, the entity shall present restated segment information for all interim periods both of the current financial year and of prior financial years, unless the information is not available and the cost to develop it would be excessive. An effective date for the proposed amendments has not yet been determined. Annual Improvements to IFRSs Cycle (Amendment) In January 2017, the International Accounting Standards Board (IASB) published an Exposure Draft (ED) with a series of amendments to IFRSs in response to issues addressed during the cycle. The amendments are summarized below: IAS 12 Income Taxes Amendments to clarify that an entity must recognise the income tax consequences of dividends when a dividend liability is recognised, and not only in circumstances where income taxes payable or refundable are measured at the tax rate applicable to undistributed profits. IAS 23 Borrowing Costs Amendments to clarify that any outstanding borrowing made to obtain a qualifying asset should be treated as funds that have been borrowed generally when the qualifying asset is ready for its intended use or sale. This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon the 16

17 IAS 28 Investments in Associates and Joint Ventures Amendments to clarify that IFRS 9 Financial Instruments (including the impairment requirements) must be applied to long-term interests in an associate or joint venture that, in substance, form part of the net investment in the associate or joint venture but to which the equity method is not applied. The amendments to IAS 28 are proposed to be effective for annual periods beginning on or after January 1, In September 2017, the IASB tentatively determined the amendments for IAS 12 and IAS 23 will be effective for annual periods beginning on or after January 1, 2019, with earlier application Definition of a Business and Accounting for Previously Held Interests (Proposed Amendments to IFRS 3 and IFRS 11) In June 2016, the International Accounting Standards Board (IASB) published an Exposure Draft (ED), Definition of a Business and Accounting for Previously Held Interests. The ED proposes amendments to clarify: Application guidance to determine the difference between a business and a group of assets when applying IFRS 3 Business Combinations; and How an entity should account for previously held interests in a business, if acquiring control or joint control of that business. In September 2017, the IASB tentatively determined the amendments will be effective for annual periods beginning on or after January 1, 2019, with earlier application Remeasurement on a Plan Amendment, Curtailment or Settlement/Availability of a Refund from a Defined Benefit Plan (Proposed Amendments to IAS 19 and IFRIC 14) In June 2015, the International Accounting Standards Board (IASB) published an Exposure Draft (ED), Remeasurement on a Plan Amendment, Curtailment or Settlement/Availability of a Refund from a Defined Benefit Plan. In July 2015, the Accounting Standards Board (AcSB) issued an ED that corresponds to the IASB s ED on this topic. The ED is proposing to amend IAS 19 Employee Benefits and IFRIC 14 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction. The objective of the project is threefold. First, to assess the availability of refunds from a defined benefit plan by: Considering other parties power to enhance benefits for plan members or wind up the plan without the entities consent, including whether the surplus recognized should include amounts that other parties can use for other purposes without the entities consent; and Considering statutory requirements, contractually agreed terms, and constructive obligations. Second, to clarify the interaction between the asset ceiling and past service costs or the gain or loss on settlement by providing the following clarifications: That past service costs or a gain or loss on settlement is recognized in profit and loss; and That changes in the effect of the asset ceiling are recognized in other comprehensive income as a result of the reassessment of the asset ceiling based on the updated surplus. Third, to address accounting when a plan amendment, curtailment or settlement occurs, by specifying that: Assumptions applied to a remeasurement of the net defined liability or asset are used to determine the current service cost and net interest after the remeasurement. In September 2017, the IASB tentatively decided to finalize, without re-exposing, the amendments to IAS 19 separately from the amendments to IFRIC 14. The amendments to IAS 19 have tentatively been determined to be effective for annual periods beginning on or after January 1, 2019, with earlier application The IASB will perform further work to assess whether a more principles-based approach can be established in IFRIC 14 for This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon the 17

18 assessing the availability of a refund of a surplus. An effective date for the proposed amendments to IFRIC 14 has not yet been determined. Conceptual Framework for Financial Reporting In May 2015, the International Accounting Standards Board (IASB) published an Exposure Draft (ED) proposing a revised conceptual framework for financial reporting. In August 2015, the Accounting Standards Board (AcSB) issued an ED that corresponds to the IASB s ED on this topic. The ED includes the following clarifications and updates: The Objective of General Purpose Financial Statements: Impact of management s efficient and effective stewardship of the entity s resources; Impact of measurement uncertainty on relevance of financial information; and Necessity for faithful representation of economic phenomena rather than merely legal interpretation. Financial Statements and the Reporting Entity: Defined boundaries for a reporting entity, and relevance and faithful representation of financial information when reporting on a consolidated or non-consolidated basis. Elements of Financial Statements Clarification of definitions of elements of financial statements (assets, liabilities, equity, income, expenses); and Guidance on executory contracts, reporting on the substance of contractual rights and contractual obligations, and unit of account. Recognition and Derecognition Description of criteria for recognition and derecognition of elements, and description of situations when said criteria are not met. Measurement Basis That measurement bases are categorized as either historical cost or current value, and that current value bases include fair value and value in use for assets and fulfilment value for liabilities. Presentation and Disclosure Description and scope of historical and forward-looking financial information; That efficient and effective communication through classification, aggregation, and disclosures should improve relevance and contribute to faithful representation of elements; and That all income and expenses should be included on the statement of profit and loss, except items included in other comprehensive income. An effective date for the proposed amendments has not yet been determined. Classification of Liabilities (Proposed Amendments to IAS 1) In March 2015, the Accounting Standards Board (AcSB) published an Exposure Draft (ED), Classification of Liabilities in response to the International Accounting Standards Board s (IASB) ED of the same name, issued in February The ED is proposing to amend IAS 1 Presentation of Financial Statements. The objective of the project is to clarify the criteria for the classification of a liability as either current or non-current by: Making the link between the settlement of the liability and the outflow of resources from the entity clear; and This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon the 18

19 Providing clarification that the classification of a liability as either current or non-current is based on the entity s rights at the end of the reporting period. An effective date for the proposed amendments has not yet been determined. This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon the 19

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