NFPO Combinations – AcSB

Date recorded:

At its meeting on July 17, 2019, the AcSB continued discussing the initial measurement of a combination between organizations within the scope of Part III of the CPA Canada Handbook – Accounting. The Board tentatively agreed, subject to further deliberation, that:

  1. unfavourable lease arrangements meet the definition of a liability and should be recognized for combinations that are accounted for as an acquisition;
  2. transaction costs should be defined in the standard and that the definition should include severance costs; and
  3. goodwill recognized from a previous not-for-profit acquisition should be expensed when a not-for-profit organization applies Part III for the first time.

The AcSB also discussed situations in which an acquiror used the size exemption for the recognition of capital assets and intangible assets prior to a combination accounted for as an acquisition. The Board decided that if the acquiror no longer met the exemption subsequent to the acquisition, the capital assets and intangible assets acquired would be recognized at fair value. The AcSB also considered other drafting proposals to clarify the definition of a reporting entity and consequential amendments. The Board will continue its deliberations in September 2019 and plans to issue an Exposure Draft in January 2020.

Review the Executive Summary on the AcSB's Web site.

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