Emerging Issues Committee
Decision Summary
August 17, 2006

Abstract Approved

EIC-163, Determining the Variability to Be Considered in Applying AcG-15, Consolidation of Variable Interest Entities

Draft Abstract D58 (now EIC-163) was posted on the CICA website June 28, 2006 for public comment by July 27, 2006.

The Committee reviewed the comments received and decided that only minor editorial revisions were required.

The Committee approved D58 as a final Abstract. It is expected that EIC-163 will be posted on the CICA website in mid-September. D58 will remain on the website until EIC-163 is posted.

Draft Abstract Approved

D61, Measurement of an Item Transferred to a Related Party that is a Variable Interest Entity

The Committee discussed a potential Draft Abstract on the accounting for the transfer of an item to a related party that is a variable interest entity (VIE) within the scope of Accounting Guideline AcG-15, Consolidation of Variable Interest Entities, and for which the transferor remains the primary beneficiary. The transferor does not have voting control or joint control over the VIE before or after the transfer.

The Draft Abstract addresses an additional issue that will be added to EIC-103, “Related Party Transactions — Meaning of Substantive Change and Measurement of Change in a Transfer of Ownership Interests.”

At its August 17, 2006 meeting, the Committee agreed that for the purposes of criterion (a) from the consensus on the first issue of EIC-103, the nature of the relationship of the transferor to the transferred item has not changed. The transferor still controls the transferred item through the VIE, with control existing on a basis other than the ownership of voting interests in the transferee.

The Committee agreed to issue Draft Abstract D61. It is expected that D61 will be posted on the CICA website for public comment by mid-September.

Abstract to Be Amended

EIC-158, Accounting for Convertible Debt Instruments

The Committee discussed a potential Draft Abstract on the accounting for Instruments A and B (as defined in EIC-158) under Section 3855, Financial Instruments — Recognition and Measurement. The Committee agreed to continue these discussions at its October 3, 2006 meeting.

Issues Considered and Added to the EIC Agenda

Accounting for Consideration Given by a Service Provider to Manufacturers or Resellers of Specialized Equipment Necessary for an End-Customer to Receive Service from the Service Provider

The Committee agreed to monitor the proposed EITF No. 06-1. The Committee agreed to defer any action on the development of a Canadian version of the Abstract until the Abstract is finalized. This guidance relates to the accounting for consideration given by a vendor to a customer discussed in EIC-156, “Accounting by a Vendor for Consideration Given to a Customer (Including a Reseller of the Vendor’s Products).”

Lessor’s Accounting for a Lease Valued at Above or Below Market Rates

The Committee agreed to add an item to the agenda on the following issue: An entity may acquire a lease as part of the acquisition of a property for which the terms are either above or below market rates at the date of acquisition. How should the acquirer account for the asset or liability representing the off-market terms of the lease subsequent to the acquisition? The Committee asked that staff develop a paper for discussion at the October 3, 2006 meeting.