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Location: Toronto
In May 2022, the Accounting Standards Board released the meeting notes of discussions held by its Private Enterprise Advisory Committee on May 10, 2022.
The following topics were discussed:
Review the meeting notes on the AcSB's Web site.
At its meeting on May 10, 2022, the PEAC received an update on the AcSB’s discussions regarding the proposals in the Exposure Draft. The Committee provided feedback for the AcSB to consider on the fact pattern and related analysis of the illustrative examples included in the Exposure Draft. The Committee thought that the examples were helpful to illustrate the application of the Accounting Guideline when an enterprise: (i) chooses to apply the simplification approach to expense as incurred all intangible elements in a cloud computing arrangement; and (ii) chooses not to apply the approach and, instead, chooses to capitalize qualifying expenditures on implementation activities when the arrangement is a software service. The Committee recommended adding more examples to illustrate some of the complexities found in other cloud computing arrangements. For example, cloud vendors often provide access to the software before completing implementation activities. Implementation may also be completed in stages where additional modules are provided later. Furthermore, some cloud software implementation may involve three parties: the customer, the software developer, and an implementation consultant. The Committee also suggested that the illustrative examples show the impact on the balance sheet and income statement, as it would be helpful to users and preparers.Regarding the availability of pricing information to allocate arrangement consideration, the Committee observed that such information is likely part of vendor quotations or can be requested by the customer. However, the Committee noted that sometimes the pricing may not always represent the value received. Therefore, further consideration of allocating the price to each element in the arrangement may be necessary. The AcSB will consider feedback from its Private Enterprise Advisory Committee’s feedback, its Not-for-Profit Advisory Committee, and other stakeholders on its Exposure Draft, at its July 2022 meeting after the comment period ends.
At its meeting on May 10, 2022, the PEAC received an update on the AcSB’s discussions regarding the proposals in the Exposure Draft. The Committee provided feedback for the AcSB to consider on the fact pattern and related analysis of the illustrative examples included in the Exposure Draft. The Committee thought that the examples were helpful to illustrate the application of the Accounting Guideline when an enterprise: (i) chooses to apply the simplification approach to expense as incurred all intangible elements in a cloud computing arrangement; and (ii) chooses not to apply the approach and, instead, chooses to capitalize qualifying expenditures on implementation activities when the arrangement is a software service. The Committee recommended adding more examples to illustrate some of the complexities found in other cloud computing arrangements. For example, cloud vendors often provide access to the software before completing implementation activities. Implementation may also be completed in stages where additional modules are provided later. Furthermore, some cloud software implementation may involve three parties: the customer, the software developer, and an implementation consultant. The Committee also suggested that the illustrative examples show the impact on the balance sheet and income statement, as it would be helpful to users and preparers.Regarding the availability of pricing information to allocate arrangement consideration, the Committee observed that such information is likely part of vendor quotations or can be requested by the customer. However, the Committee noted that sometimes the pricing may not always represent the value received. Therefore, further consideration of allocating the price to each element in the arrangement may be necessary. The AcSB will consider feedback from its Private Enterprise Advisory Committee’s feedback, its Not-for-Profit Advisory Committee, and other stakeholders on its Exposure Draft, at its July 2022 meeting after the comment period ends.
Review the meeting notes on the AcSB's Web site.
At its meeting on May 10, 2022, the PEAC discussed implementation of recent amendments to Section 3400, Revenue, regarding the accounting for upfront non-refundable fees or payments. The Committee discussed stakeholder feedback that the amendments may result in a change to how private member clubs were previously accounting for upfront initiation fees using Part III of the CPA Canada Handbook – Accounting. Committee members highlighted that some private clubs applying Part II of the Handbook could experience a similar change in their accounting for revenue as a result of the amendments.The AcSB will consider the Committee’s feedback at its meeting on May 18, 2022.
At its meeting on May 10, 2022, the PEAC discussed implementation of recent amendments to Section 3400, Revenue, regarding the accounting for upfront non-refundable fees or payments. The Committee discussed stakeholder feedback that the amendments may result in a change to how private member clubs were previously accounting for upfront initiation fees using Part III of the CPA Canada Handbook – Accounting. Committee members highlighted that some private clubs applying Part II of the Handbook could experience a similar change in their accounting for revenue as a result of the amendments.The AcSB will consider the Committee’s feedback at its meeting on May 18, 2022.
Review the meeting notes on the AcSB's Web site.
At its meeting on May 10, 2022, the PEAC received an update on the Related Party Combinations project. The Committee discussed which issues in accounting for combinations between businesses under common control are a high priority. The Committee also discussed whether the AcSB should consider a phased approach to expedite standard setting, addressing some issues now and other issues at a later time.Committee members supported the proposal to amend Related Party Transactions, paragraph 3840.44(a), to remove reference to the exchange amount to clarify that business combinations under common control meeting the criteria in paragraph 3840.29 would only be subject to requirements in Section 1582, Business Combinations. Committee members agreed that this proposal is unlikely to change current practice as the exchange amount in business combinations under common control approximates the fair value.Some Committee members suggested that additional guidance regarding business combinations between related companies that are not under common control would be useful to preparers.Several Committee members indicated that addressing the requirement in paragraph 3840.44(b) to retroactively restate comparatives is a high priority item. Providing optionality over the retroactive restatement would allow entities to meet user needs and provide relief from added reporting.The AcSB will consider the Committee’s feedback at the July 2022 Board meeting.
At its meeting on May 10, 2022, the PEAC received an update on the Related Party Combinations project. The Committee discussed which issues in accounting for combinations between businesses under common control are a high priority. The Committee also discussed whether the AcSB should consider a phased approach to expedite standard setting, addressing some issues now and other issues at a later time.Committee members supported the proposal to amend Related Party Transactions, paragraph 3840.44(a), to remove reference to the exchange amount to clarify that business combinations under common control meeting the criteria in paragraph 3840.29 would only be subject to requirements in Section 1582, Business Combinations. Committee members agreed that this proposal is unlikely to change current practice as the exchange amount in business combinations under common control approximates the fair value.Some Committee members suggested that additional guidance regarding business combinations between related companies that are not under common control would be useful to preparers.Several Committee members indicated that addressing the requirement in paragraph 3840.44(b) to retroactively restate comparatives is a high priority item. Providing optionality over the retroactive restatement would allow entities to meet user needs and provide relief from added reporting.The AcSB will consider the Committee’s feedback at the July 2022 Board meeting.
Review the meeting notes on the AcSB's Web site.