Accounting Standards for Private Enterprises (ASPE)

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

The AcSB issued amendments to Section 3400 to defer the effective date of previously issued application guidance for recognizing revenue from upfront non-refundable fees or payments from fiscal years beginning on or after January 1, 2022, to fiscal years beginning on or after January 1, 2025.

The application guidance for recognizing revenue from upfront non-refundable fees or payments included in Section 3400 is 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).

Revised standard – Financial instruments

The AcSB issued amendments to Section 3856, Financial Instruments that are applicable to private enterprises and NFPOs. The amendments:

• provide an optional expedient to account for debt modifications directly related to Interbank Offered Rate Benchmark Reform (IBOR reform) as a continuation of the existing contract rather than an extinguishment
• require qualifying hedging relationships to continue if all changes made to the contractual terms are directly related to the replacement of IBORs

Effective for annual reporting periods beginning on or after February 1, 2022, with early application permitted.

New standard – Agriculture

The AcSB issued a new standard (Section 3041) that sets out the principles for the recognition, measurement and disclosure of agricultural inventories and productive biological assets. The standard applies to transactions and events related to agricultural production, including the purchase of the harvested product of biological assets for use in agricultural production.

Effective for annual reporting periods beginning on or after January 1, 2022, with early application permitted.

Revised standard – Revenue

The AcSB issued amendments to the revenue standard (Section 3400) that provide additional guidance on:

• percentage of completion method
• multiple element arrangements
• reporting revenue gross or net
• bill and hold arrangements
• upfront non-refundable fees/payments

These amendments provide guidance that was previously not included in Section 3400 and eliminate the need to refer to guidance outside of ASPE for recognition of revenue.

Effective for annual reporting periods beginning on or after January 1, 2022, with early application permitted.

Revised standard – Leases

As a result of the ongoing Covid-19 pandemic, the AcSB revised Section 3065 to extend the practical relief period by one year to December 31, 2022 for both lessees and lessors in relation to accounting for rent concessions received or granted.

Effective for annual periods ending on or after December 31, 2021, with early application permitted.

Exposure draft – Related party transactions: Improvements to accounting for common control combinations

The AcSB issued an exposure draft proposing amendment to Section 3840 to address accounting for:

• a combination between enterprises or businesses under common control
• financial assets acquired or financial liabilities assumed in a combination between enterprises under common control

The proposals would:

• require business combinations under common control meeting specified criteria to be subject to the guidance in Section 1582, Business Combinations and the reference to “exchange amount” in paragraph 3840.44(a) would be removed
• allow an option in paragraph 3840.44(b) to either retrospectively restate all prior periods when carrying values are used to account for a combination or prospectively account for these combinations
• clarify that financial assets acquired, or financial liabilities assumed when a business is transferred between two enterprises under common control will be measured using the principles in paragraph 3840.44

The comment period is closed. The AcSB is currently deliberating the feedback received.

Consultation paper I – Exploring Scalability in Canada

The AcSB issued a consultation paper to gather input from private enterprise, not-for-profit organization (NFPO), and pension plan stakeholders – including financial statement preparers, users, and practitioners – on current key issues and potential solutions related to scaling the standards. The Paper represents only the first phase of consultation activities on this project and the AcSB is seeking the thoughts of stakeholders on potential solutions that would address concerns when applying accounting standards.

Comments are requested by July 31, 2023.

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.

• Framework for Reporting Performance Measures – voluntary guidance for enhanced decision making (AcSB, 2021)
• ASPE Summary Resources Guide (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)
• Chapter 45: Financial instruments guide (CPA Canada, 2019)

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