| This summary of Accounting Standards Board (AcSB) projects has been prepared for
information purposes only. Decisions reported are tentative and reflect only the current status of
discussions on this project, which may change after further deliberations by the AcSB. Decisions to publish
Handbook material are final only after a formal ballot process. |
Status: Deliberation of comments received on "Non-controlling Interests (PDF)" Exposure Draft in
progress.
Background
Activities to Date
Next Steps
Related Information
Contact Information
Background
Section 1581, Business Combinations, was the first stage in updating the
accounting standards for business combinations. Specifically, it carried forward without reconsideration
existing guidance on the application of the purchase method. The application of Section 1581 to business
combinations between two or more co-operative enterprises was deferred until interpretive guidance was
issued.
This project is being developed in parallel with the joint US FASB/ IASB project on business combinations.
It is the AcSB's intent that its proposed new standards will be harmonized with the converged International
Accounting Standards Board’s (IASB) and the US Financial Accounting Standards Board’s (FASB) standards on
business combinations and with their guidance on accounting for non-controlling interests.
Activities to Date
In 2005, the AcSB issued an Exposure
Draft (PDF) of a proposed new standard on business combinations that would replace Section 1581, Business Combinations. In addition to addressing the
measurement of a business combination and the recognition and measurement of assets acquired and liabilities
assumed, the proposals also have implications for the accounting for non-controlling interests (NCIs) in
consolidated financial statements subsequent to the business combination. The AcSB discussed the
comment letters received on its Exposure Draft and forwarded them to the IASB and the FASB (except for those
requesting confidentiality). No unique Canadian circumstances were identified by the AcSB or by respondents
to the Exposure Draft that would justify differences in the accounting for business combinations.
The 2005 Exposure Draft included the key principles of the proposals on accounting for NCIs in consolidated
financial statements subsequent to the business combination, but did not provide proposed wording. Consistent
with the intent indicated in the 2005 Exposure Draft, the AcSB is developing an exposure draft on NCIs based
on proposed amendments to International Financial Reporting Standard IAS 27, Consolidated and Separate Financial Statements, released in
January 2008.
- In January 2008, the AcSB agreed to issue an exposure draft proposing:
-
- new Section 1602, Non-controlling Interests, providing guidance on the
treatment of NCIs after acquisition in a business combination that is converged with newly revised IAS 27,
Consolidated and Separate Financial Statements; and
- new Section 1601, Consolidated Financial Statements, carrying forward
existing Canadian guidance on aspects of the preparation of consolidated financial statements subsequent to
acquisition other than NCIs.
Next Steps
These new Sections are expected to be issued concurrently with
new Section 1582, Business Combinations. Replacing Section 1581, Business Combinations, and Section 1600, Consolidated Financial
Statements, the three new Sections would be effective for years beginning on or after January 1, 2011
with earlier adoption permitted. Entities planning business combinations for the year beginning on or after
January 1, 2010 should adopt these new standards in or before that year to avoid restatement on transition to
IFRSs in 2011.
- Related Information
-
Contact Information
Questions or comments on this project should be directed to:
Kate Ward, CA
Principal, Accounting Standards
Telephone: +1 (416) 204-3437
Fax: +1 (416) 204-3412
Canadian Accounting Standards Board
277 Wellington Street West
Toronto ON M5V 3H2 Canada
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