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PSAB – Purchased Intangibles – Narrow Scope Amendment [ED]

Comment period ends on January 31, 2020

Next steps:

The PSAB will review the comments on the Exposure Draft by stakeholders in Q1/2020

Last up­dated:

November 2019

 

Overview

As a result of stakeholder feedback received, PSAB was asked to revisit the validity of the prohibition against recognizing purchased intangibles in public sector financial statements.

Key stakeholder feedback includes:

  • At its April 26, 2019 Public Sector Accounting Discussion Group (PSA DG) meeting, PSA DG members suggested that PSAB consider a narrow scope amendment.
  • Input received in response to the 2018 conceptual framework and reporting model documents for comment supported PSAB relocating the recognition prohibitions from the conceptual framework to the standards level. Some urged PSAB to remove them entirely.
  • Input received at the 2018 AFOA conference told PSAB how significant this issue is for Indigenous governments and how the prohibition was distorting their financial position. For example, these governments may finance the purchase of commercial fishing (and other) licenses with debt but cannot currently recognize the licenses as assets.
  • PSAB stakeholders have asked why purchased intangibles acquired through an exchange transaction cannot be recognized in public sector financial statements as they are measurable at the price in the transaction.

The PSAB approved the project at its June 2019 meeting.

On November 29, 2019, the 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 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. i.c., 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.

 

Other de­vel­op­ments

November 2019

On November 29, 2019, the PSAB released an Exposure Draft that proposes to remove the prohibition against recognizing intangibles purchased in an exchange transaction in public sector financial statements.

June 2019

At its meeting in June 2019, the PSAB approved a project to consider this issue.

 

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