AcSB Exposure Draft – Improvements to Accounting for Common Control Combinations

The Accounting Standards Board (AcSB) proposes, subject to comments received following exposure, to amend Section 3840, Related Party Transactions, in Part II of the CPA Canada Handbook – Accounting.

The proposed amendments address accounting for:

• a combination between enterprises or businesses under common control; and
• financial assets acquired or financial liabilities assumed in a combination between enterprises under common control.

The proposed amendments would:

• allow all of Section 1582, Business Combinations, to be used for certain business combinations under common control by removing the reference to “exchange amount” in paragraph 3840.44(a);
• allow an option in paragraph 3840.44(b) to retrospectively restate all prior periods when carrying values are used to account for a combination or prospectively account for these transactions; and
• clarify that financial assets acquired or financial liabilities assumed when a business is transferred between two enterprises under common control will be measured using the principles in paragraph 3840.44.

The amendments will apply to private, profit-oriented enterprises applying the standards in Part II of the Handbook, as relevant.

The proposals would apply for annual periods beginning on or after January 1, 2025, with early application permitted. Enterprises would apply the proposed amendments prospectively to new combinations entered into from the beginning of the fiscal year in which the amendments are first applied.

Learn more