Accounting Standards for Private Enterprises (ASPE)

Revised standard – Revenue – Upfront non-refundable fees or payments

The AcSB issued amendments to Section 3400, Revenue to indefinitely defer the effective date of application guidance for upfront non-refundable fees or payments that were issued in December 2019. Earlier application is permitted, including in financial statements not yet authorized for issue.

The amendments also require an enterprise to disclose the nature and amount of upfront non-refundable fees or payments recognized in revenue when the enterprise recognizes the fee or payment in revenue upon entering into the arrangement.

The disclosure requirement is effective for annual financial statements relating to fiscal years beginning on or after January 1, 2025, with earlier application permitted.

Revised standards: Accounting for common control combinations

The AcSB issued amendments to Section 3840, Related Party Transactions to:

• clarify that business combinations under common control that meet the criteria specified in paragraph 3840.44(a) should be accounted for in accordance with Section 1582, Business Combinations and the reference to “exchange amount” previously included in paragraph 3840.44(a) has been removed; and
• provide an option in paragraph 3840.44(b) to either retrospectively restate all prior periods when carrying amounts are used to account for a combination or prospectively account for these transactions.

Amendments to Section 3856, Financial Instruments have also been issued to clarify that financial assets acquired, or financial liabilities assumed when a business is transferred between two enterprises under common control are to be measured using the principles in Section 3840.44, not Section 3856.

Effective for annual reporting periods beginning on or after January 1, 2025, with early application permitted.

New accounting guideline – Customer’s accounting for cloud computing arrangements

The AcSB issued new accounting guideline (AcG-20) on accounting for cloud computing arrangements that is applicable to private enterprises and NFPOs. The guideline provides guidance on:

• accounting for a customer’s expenditures in a cloud computing arrangement
• determining whether a software intangible asset exists in the arrangement

The guideline also includes an optional simplification approach to permit an enterprise to expense as incurred the expenditures related to the elements in the arrangement within the scope of Section 3064, Goodwill and Intangible Assets.

Effective for annual periods beginning on or after January 1, 2024, with earlier application permitted.

Section 1506, Accounting Changes has been amended to include AcG-20 as a situation when an enterprise may change its accounting policy without meeting the “more relevant information” criterion described in paragraph 1506.06(b).

Request for input – Subsequent Measurement of Goodwill and Acquired Intangible Assets

Join the AcSB for a virtual roundtable discussion to share your feedback with them to inform future exposure draft proposals on providing relief from recognizing intangible assets acquired in business combinations and allowing entities to amortize goodwill. The English roundtables are taking place on May 27 and June 12, 2024, and the French roundtable is taking place on May 30, 2024. Register now to save your spot.

Exposure draft – Accounting for Life Insurance Contracts with Cash Surrender Value

The AcSB issued an exposure draft proposing to issue new Accounting Guideline AcG-21, Accounting for Life Insurance Contracts with Cash Surrender Value. The proposed Guideline addresses the accounting for life insurance contracts that contain a cash surrender component, from the policy owner’s point of view. The proposed Guideline includes guidance on recognition and measurement of cash surrender value of a life insurance policy, presentation of policy premiums and changes in cash surrender value, and disclosures.

The comment period is closed. The AcSB is currently deliberating the feedback received and intends to issue the new Accounting Guideline and accompanying Basis for Conclusions in Part II of the Handbook in September 2024.

Additional non-authoritative guidance

To stay ahead of the curve, find additional non-authoritative guidance to help you navigate the application of the accounting standards for private entities.

• Section 3041, Agriculture – How to apply the disclosure requirements for the net realizable value model (AcSB, 2023)
• In Brief: Section 3465, Income Taxes – International Tax Reform – Pillar Two Model Rules (AcSB, 2023)
• Framework for Reporting Performance Measures – voluntary guidance for enhanced decision making (AcSB, 2021)
• ASPE Summary Resources Guide (CPA Canada, 2021)
• ASPE Briefing: Section 3041, Agriculture (CPA Canada, 2021)
• ASPE Briefing: Section 3462, Employee Future Benefits – A Focus on Defined Benefit Plans (CPA Canada, 2021)
• ASPE Briefing: Section 3400, Revenue (CPA Canada, 2021)
• ASPE Briefing: Accounting for Investments (CPA Canada, 2020)
• ASPE Alert: Accounting for related party financial instruments and significant risk disclosures (CPA Canada, 2019)
• An introduction to accounting for cryptocurrencies under ASPE (CPA Canada, 2019)
• ASPE Briefing: Retractable or mandatorily redeemable shares issued in a tax planning arrangement (CPA Canada, 2019)
• AcSB Podcast: Addressing Implementation Questions related to retractable or mandatorily redeemable shares issued in a tax planning arrangement (AcSB, 2019)
• Chapter 45: Financial instruments guide (CPA Canada, 2019)

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