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2013 Annual Improvements [Completed]

Effective date: Periods beginning on or after January 1, 2014.  Earlier application is permitted.

Transitional provisions:

Periods beginning on or after January 1, 2014.  Earlier application is permitted.

Last updated:

October 2013

Overview

The following summarizes the significant amendments:

Section 1582 required that contingent consideration be remeasured only on settlement. The AcSB has been informed that, in some cases, payment is deferred past the date on which the contingency is resolved and it is unclear, in those circumstances, when remeasurement should occur. The amendment to paragraph 1582.60(b) clarifies that contingent consideration is remeasured at fair value when the contingency is resolved.

The disclosures in Section 1582 were applicable to all business combinations, regardless of the subsequent accounting for the subsidiary. Some stakeholders have noted, and the AcSB has agreed, that certain of those disclosures are not relevant or of significant benefit when the subsidiary is subsequently accounted for under the cost or equity method. Paragraph 1582.62 has been amended and paragraph 1582.62A has been added to require only certain disclosures when the subsidiary is accounted for under the cost or equity method.

Section 1590 did not address how a change of ownership should be accounted for when the cost or equity method is used to account for a subsidiary.  Paragraph 1590.15, has been amended to clarify that the accounting for a change in ownership interest is based on the accounting policy used to account for the subsidiary.

Some stakeholders have noted that Section 1602 may be unclear that an entity does not deduct non-controlling interests in determining net income. Also, there may be some uncertainty with respect to how exchange gains and losses arising from translation of a self-sustaining foreign operation that are attributable to the non-controlling interest should be allocated. The amendments provide clarification on these issues.

Similar to Section 1590, Subsidiaries, paragraph 3055.17, has been amended to clarify that the accounting for a change in ownership interest is based on the accounting policy used to account for the interests in joint ventures.

Paragraph 3856.03(k) has been amended to clarify that contingent consideration is remeasured when the contingency is resolved.

Paragraph 3856.A26A has been added to clarify that a financial instrument redeemable only by economic compulsion, rather than contractual requirement, is not classified as a financial liability.

The hedge accounting requirements in Section 3856 do not achieve the intended result when an anticipated transaction is hedged by a foreign exchange forward contract that settles by an exchange of currencies before the hedged transaction is recognized. Paragraph 3856.A62A has been added to clarify the treatment of hedging relationships using foreign exchange forward contracts that mature before the hedged item is recognized.

Recent activities

October 2013

On October 31, 2013, the AcSB issued a Basis for Conclusions in respect of these amendments.

July 2013

At its meeting on July 10, 2013, the AcSB approved amendments to improve its accounting standards for private enterprises as set out in Part II of the CPA Canada Handbook - Accounting.

Correction list for hyphenation

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