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FYI Article – Subsidiaries and Interests in Joint Arrangements: Take Advantage of the Transitional Provisions in 2016

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Aug 16, 2016

On August 16, 2016, the staff of the Accounting Standards Board (AcSB) issued a FYI Article to remind private enterprises that they have a one-time opportunity in 2016 to take advantage of the transitional relief contained new Section 1591, Subsidiaries, and new Section 3056, Interests in Joint Arrangements, which are effective for annual periods beginning on or after January 1, 2016.

The FYI Article explains that the new Sections include guidance that was developed in part to encourage and provide relief to private enterprises electing to consolidate their subsidiaries. However, the provisions are available only on initial transition to these new Sections. Enterprises that may benefit from the relief include those: (i) using the cost method to account for their subsidiaries who choose to prepare consolidated financial statements for the first time when applying Section 1591; and (ii) preparing consolidated financial statements that may identify additional subsidiaries not previously consolidated.

The FYI Article also notes that the AcSB expects to issue its final clarifying amendments to these new Sections in the fourth quarter of 2016. The amendments will be effective for years beginning on or after January 1, 2017 and earlier application is permitted. The amendments are intended to be applied retrospectively. Visit our Project page for additional information on these amendments.

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