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AcSB Exposure Draft – Clarifications to Sections 1591 and 3056

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May 25, 2016

On May 25, 2016, the Accounting Standards Board (AcSB) released its proposals to clarify Section 1591, Subsidiaries, and Section 3056, Interests in Joint Arrangements, in response to stakeholder feedback. Stakeholders are encouraged to submit their comments by August 2, 2016.

The proposed narrow-scope amendments are intended to clarify guidance or wording and to correct for unintended consequences, conflicts or oversights, similar to the process for annual improvements.

The following summarizes the proposed amendments:

Section 1591, Subsidiaries
The proposed amendment clarifies that

  • the transition provisions may not be applied when an enterprise changes its accounting policy choice to consolidate its subsidiaries at any time after initial application of Section 1591.
  • an enterprise is not required to assess whether contractual arrangements give rise to control when subsidiaries are not consolidated.
  • the voting interest, if any, that an investor holds in a subsidiary is accounted for using paragraph 1591.24(b)(i) when subsidiaries are not consolidated.

Section 3056, Interests in Joint Arrangements
The proposed amendment clarifies that the transition provisions may not be applied when an enterprise changes its accounting policy choice, as permitted by paragraph 3056.29, at any time after initial application of Section 3056.

Timing of adoption and transitional provisions

The AcSB expects to issue the final amendments in the fourth quarter of 2016. The amendments will be effective for years beginning on or after January 1, 2017. Earlier application is permitted. The AcSB intends that the amendments be applied retrospectively.

Review the exposure-draft on the AcSB's Web site.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.