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Exposure Draft, Narrow Scope Amendment – Purchased Intangibles

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Nov 29, 2019

On November 29, 2019, the Public Sector Accounting Board (PSAB) released an exposure draft that proposes to remove the prohibition against recognizing intangibles purchased in an exchange transaction in public sector financial statements. The change is proposed to respond to input from Indigenous governments and other PSAB stakeholders.

The Exposure Draft proposes to remove the exclusion in the conceptual framework prohibiting recognition of purchased intangibles in financial statements. The proposal is limited to intangibles purchased through an exchange transaction. Removing the recognition prohibition on purchased intangibles would address a material imbalance in the statements of financial position of many Indigenous governments. These governments may finance the purchase of commercial fishing (and other) licenses with debt but cannot currently recognize the licenses as assets. The proposal may also have implications for other public sector entities that purchase intangibles.

Like the current situation for purchased Crown lands and purchased natural resources, no guidance on how to account for purchased intangibles is proposed in this Exposure Draft. For now, reference to the asset definition, the general recognition criteria and the GAAP hierarchy is expected. Accounting for these items may be the subject of future PSAB projects.

Read the press release and Exposure Draft on the AcSB's website.

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