Section 1591 - Subsidiaries

Effective date:

January 1, 2016, except for subsequent amendments

Published by the AcSB:

September 2014


This Section establishes standards 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". The section provides private enterprises with an accounting policy choice to either: a) consolidate its subsidiaries or b) account for its subsidiaries that are: i) controlled through voting interests, potential voting interests or a combination thereof using the cost or equity method and ii) controlled through contractual arrangements according to the nature of the contract arrangement in accordance with the applicable Section (e.g. Section 3065 Leases and Section 3856 Financial Instruments).

Control of an enterprise is the continuing power to determine its strategic operating, investing and financing policies without the co-operation of others. The continuing power to determine the strategic operating, investing and financing policies of an enterprise without the co-operation of others may be obtained through statute, contractual arrangements, or ownership of financial instruments that, if converted or exercised, either individually or through a combination thereof, would give the other enterprise control. The following are examples of such situations:

  1. Ownership of less than the majority of voting shares combined with an irrevocable arrangement with other owners to exercise voting interests collectively may result in majority voting power and, therefore, may confer control.
  2. Control may exist when an enterprise does not own the majority voting interest if it has the continuing ability to elect the majority of the members of the board of directors through ownership of rights, options, warrants, convertible debt, convertible non-voting equity such as preferred shares, or other similar instruments that, if converted or exercised, would give the enterprise the majority voting interest.

This Section is closely related to:

History of Section 1591




September 2014

This new Section replaces Section 1590 Subsidiaries 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.

Decem­ber 2016

Accounting for Subsidiaries under the Cost Method and the Equity Method (Amendments to Sections 1591 and 3051). 

Ef­fec­tive for fis­cal years be­gin­ning on or af­ter Jan­u­ary 1, 2018.  Ear­lier ap­pli­ca­tion is per­mit­ted.

Decem­ber 2016 Narrow-scope Clarifying Amendments to Sections 1591 and 3056. Generally ef­fec­tive for fis­cal years be­gin­ning on or after Jan­u­ary 1, 2018.  Ear­lier ap­pli­ca­tion is permitted.
Decem­ber 2018 Retractable or Mandatorily Redeemable Shares Issued in a Tax Planning Arrangement (Amendments to Sections 1591, 3251 and 3856)

The amendments are effective for annual financial statements relating to fiscal years beginning on or after January 1, 2020. Earlier application is permitted.

April 2020 Re­tractable or Manda­to­rily Re­deemable Shares Is­sued in a Tax Plan­ning Arrange­ment (Amend­ments to Sec­tions 1591, 3251 and 3856)

At its meet­ing on April 15, 2020, as a re­sult of the im­pact of the Covid 19 pan­demic, the AcSB de­cided to de­fer the ef­fec­tive date of these amendments by one year to fis­cal years be­gin­ning on or af­ter Jan­u­ary 1, 2021. Ear­lier ap­pli­ca­tion con­tin­ues to be per­mit­ted. The related amendments to the CPA Canada Handbook – Accounting Part II were issued on August 1, 2020.

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

Private Enterprise Advisory Committee Meeting Notes

  • February 7, 2018 - Discussed a summary of the feedback obtained from outreach activities on the Exposure Draft
  • April 14, 2016 - Responses received on the AcSB’s Exposure Draft, “Subsidiaries and Investments”
  • April 14, 2016 - Subsidiaries and Interests in Joint Arrangements
  • February 17, 2016 - 2017 Annual Improvements: Subsidiaries – Transitional Provisions
  • February 17, 2016 - 2017 Annual Improvements: Subsidiaries – Accounting for a Subsidiary Controlled through a Combination of Contractual Arrangements and Voting Interest
  • April 1, 2015 - Accounting for a subsidiary and an investment using the cost method
  • December 17, 2014 - Subsidiaries
  • September 16, 2014 - Accounting for a subsidiary when the cost or equity method is used

Amendments under consideration

  • None

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