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Closing the GAAP: New Canadian GAAP Pronouncements
Publication date: 11 Apr 2024
ca Closing the GAAP
(including developments to April 11, 2024)
Effective April 11, 2024, this page replaces the quarterly issuance of the Closing the GAAP Canadian GAAP newsletters. This page is maintained and updated on a periodic basis as new pronouncements are issued. For ease of identification, publication dates have been added to updates made after this date.
Closing the GAAP: Updates to Canadian GAAP Pronouncements
The following summarizes Canadian GAAP pronouncements that must be applied, if applicable, for the first time to a calendar year-end company that is preparing financial statements in accordance with Canadian GAAP.
This page sets out new requirements by the calendar year in which they are first effective. Developments relate to Canadian GAAP as set out in the following parts of the CPA Canada Handbook:
While we have attempted to make this newsletter as complete as possible, it may not include all changes or modifications to existing authoritative literature that may affect a particular enterprise.
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Developments related to CPA Canada Handbook, Part II – Private Enterprises
Impacting 2022 Calendar Years | |||
|---|---|---|---|
Reference | Pronouncement and impact | Effective date | Learning more |
Section 3856
| Financial instruments
Section 3856 has been amended to provide relief to debt modification accounting and hedge accounting during the reform of benchmark interest rates (IBOR reform). Specifically, the amendments:
| These amendments are effective for fiscal years ending on/after February 1, 2022. Earlier application is permitted, including in financial statements not yet authorized for issue.
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2021 Annual improvements Amendments to:
Section 1500
Section 1510
Section 1540
Section 3856
| First time adoption
Added a clarification that an enterprise whose most recent annual financial statements were not prepared in accordance with accounting standards for private enterprises (ASPE), but that applied ASPE in a previous reporting period, can apply ASPE first time adoption guidance again or can apply the standards retrospectively in accordance with Section 1506, Accounting changes. Disclosure requirements in this regard were also added.
Current assets and current liabilities
Amended to specify separate presentation on the balance sheet of amounts owing on loans from directors, officers and shareholders, and amounts owing to parent and other affiliated companies, whether on account of a loan or otherwise, optional. An alternative option is to present in aggregate and disclose separately in the notes to the financial statements or supporting schedules.
Cash flow statement
The requirement to disclose in aggregate the total assets, other than cash or cash equivalents, and total liabilities acquired or disposed of has been removed, in respect of both business combinations and disposals of business units during the period.
Financial instruments
Illustrative Example 3, has been amended to use an assigned value of $45,000.
| Effective for years beginning on/after January 1, 2022.
| |
Section 3400 Consequential amendments to:
Section 1500
| Revenue
Amended to provide additional guidance relating to identifying the units of account, multiple-element arrangements, the percentage of completion method, reporting revenue gross or net, bill and hold arrangements, upfront non-refundable fees or payments, and disclosure requirements for contracts in progress at the end of the reporting period accounted for using the percentage of completion method.
| Effective for years beginning on/after January 1, 2022*.
*Effective date for the amendments related to upfront non-refundable fees or payments referred to above was deferred to fiscal years beginning on or after January 1, 2025, with earlier application permitted, by amendments to Section 3400 issued in November 2022.
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Section 3041
Consequential amendments to:
Section 1500
Section 1520
Section 1521
Section 3031
| Agriculture
New section sets out principles for the recognition, measurement and disclosure of agricultural inventories and productive biological assets.
| Effective for years beginning on/after January 1, 2022.
| |
Section 3462
Consequential amendments to:
Section 1506
| Employee future benefits
Amended to i) clarify the measurement of the defined benefit obligation (DBO) for plans with a legislative, regulatory or contractual requirement to prepare a funding valuation, and ii) remove the accommodation to allow the use of a funding valuation for defined benefit plans without a funding valuation requirement.
| Effective for years beginning on/after January 1, 2022.
| |
Impacting 2024 Calendar Years | |||
|---|---|---|---|
Reference | Pronouncement and impact | Effective date | Learning more |
AcG-20
Consequential amendments to:
Section 1500
Section 1521
| Customer's Accounting for Cloud Computing Arrangements
New accounting guideline provides guidance on:
Significant consequential amendments include changes to:
| Effective for annual periods beginning on/after January 1, 2024, with earlier application permitted.
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Impacting 2025 Calendar Years | |||
|---|---|---|---|
Reference | Pronouncement and impact | Effective date | Learning more |
Section 3840
| Related party transactions
Amended to i) clarify the application of Section 1582 to business combinations under common control accounted for in accordance with paragraph 3840.44(a) and ii) provide an option to either retrospectively restate prior periods or to prospectively account for a transaction when carrying amounts are used to account for a combination in paragraph 3840.44(b).
| These amendments are effective for fiscal years beginning on or after January 1, 2025. Earlier application is permitted
| |
Section 3856
| Financial instruments
Amended to clarify the initial measurement of financial instruments acquired or liabilities assumed when a business is transferred between two enterprises under common control.
| These amendments are effective for fiscal years beginning on or after January 1, 2025. Earlier application is permitted
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Developments related to CPA Canada Handbook, Part III – Not-for-profit Organizations
Impacting 2022 Calendar Years | |||
|---|---|---|---|
Reference | Pronouncement and impact | Effective date | Learning more |
2021 Annual improvements
Amendments to:
Section 1501
| First time adoption
Added a clarification that an enterprise whose most recent annual financial statements were not prepared in accordance with accounting standards for not-for-profit organizations (ASNPO), but that applied ASNPO in a previous reporting period, can apply ASNPO first-time adoption guidance again or can apply the standards retrospectively in accordance with Section 1506, Accounting changes. Disclosure requirements in this regard were also added.
| Effective for years beginning on/after January 1, 2022.
| |
Section 4449
| Combinations by Not-for-Profit Organizations
New section sets out principles for the recognition, initial measurement and disclosure of combinations by not-for-profit organizations.
| Effective for years beginning on/after January 1, 2022.
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Section 1501
Section 3032
Section 4433
| Amendments related to Section 3041, Agriculture in Part II
Section 1501 is amended to permit a first-time adopter to apply the transitional provisions in Section 3041 in Part II of the Handbook.
Section 3032 is amended to clarify that an NPO accounts for agricultural inventories in accordance with Section 3041 in Part II of the Handbook.
Section 4433 is amended to clarify that an NPO accounts for productive biological assets in accordance with Section 3041 in Part II of the Handbook.
| Effective for years beginning on/after January 1, 2022.
| |
Section 1501
| Amendments related to Section 3400, Revenue in Part II
Section 1501 is amended to permit a first-time adopter to apply the transitional provisions in Section 3400 in Part II of the Handbook.
| Effective for years beginning on/after January 1, 2022.
| |
Section 3462
| Employee future benefits
Amended to i) clarify the measurement of the defined benefit obligation (DBO) for plans with a legislative, regulatory or contractual requirement to prepare a funding valuation, and ii) remove the accommodation to allow the use of a funding valuation for defined benefit plans without a funding valuation requirement.
A not-for-profit organization applies these amendments as specified in transitional provisions of Section 3463.
| Effective for years beginning on/after January 1, 2022.
| |
Impacting 2024 Calendar Years | |||
|---|---|---|---|
Reference | Pronouncement and impact | Effective date | Learning more |
Consequential amendments to:
Section 1501
Section 4434
| Amendments related to AcG-20 Customer's Accounting for Cloud Computing Arrangements in Part II
Consequential amendments as a result of AcG-20, Customer’s Accounting for Cloud Computing Arrangements include changes to:
| Effective for annual periods beginning on/after January 1, 2024, with earlier application permitted.
| |
Developments related to CPA Canada Handbook, Part IV – Pension Plans
Entities applying Part IV must also apply either Part I (IFRS Accounting Standards) or Part II (Accounting Standards for Private Enterprises) when accounting for balances and transactions that are not covered by Part IV. Entities should also then consider new accounting pronouncements set out in either Closing the GAAP: IFRS Accounting Standards or the Part II guidance for private enterprises above.
Impacting 2024 Calendar Years | |||
|---|---|---|---|
Reference | Pronouncement and impact | Effective date | Learning more |
Section 4600
| Pension Plans
Section 4600 is amended to:
| Effective for years beginning on/after January 1, 2024, with earlier application permitted.
| |
Section 4600
| Pension Plans
As part of the Annual Improvements to Accounting Standards for Pension Plans, Section 4600 is amended to provide relief from disclosure requirements under paragraph 4600.32 for investments that are financial instruments not measured at fair value (i.e. buy-in annuity contracts).
| Effective for years beginning on/after January 1, 2024, with earlier application permitted.
| |
PricewaterhouseCoopers LLP, an Ontario limited liability partnership
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