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Section 1590 - Subsidiaries

Effective date:

January 1, 2011 except for subsequent amendments

Published by AcSB:

December 2009


This Section establishes standards for accounting for subsidiaries in the general purpose financial statements. It provides guidance on when one enterprise "controls" another enterprise such that the other enterprise qualifies as a "subsidiary". This section provides private enterprises with an accounting policy choice to: a) consolidate its subsidiaries or b) account for its subsidiaries using the cost method or the equity method.

This Section is closely related to:

The application of consolidation principles to variable interest entities is dealt with in Accounting Guideline AcG-15 Consolidation of Variable Interest Entities.

History of Section 1590




December 2009

Part II of the CPA Canada Handbook  issued

Effective for fiscal years beginning on or after January 1, 2011.

For fiscal years beginning on or after January 1, 2016, Section 1590 is replaced by Section 1591 Subsidiaries.

October 2012

Annual improvements

Paragraph .16A, has been added to address the accounting for acquisition costs and contingent consideration when a subsidiary is accounted for under the cost or equity method.

October 2013

Annual improvements

Paragraph .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.

September 2014

Publication of Section 1591 Subsidiaires.  It replaces Section 1590 and Accounting Guideline AcG-15 Consolidation of Variable Interest Entities.

Effective for fiscal years beginning on or after January 1, 2016.  Earlier application is permitted.

The main changes between Section 1591 and Section 1590 is the replacement of AcG-15. There is more judgment-based guidance on determining when control is obtained through means other than equity interests. Section 1591 includes the following additional guidance:

  • how to apply the existing definitions of "control" and "subsidiary" when equity interests may not be the dominant factor in determining control
  • descriptions of the types of contractual arrangements that may give control 
  • other facts and circumstances to consider when evaluating control
  • distinguishing protective rights from rights that confer control


Note: The above summary does not include details of consequential amendments made as the result of other projects.

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.