The CICA’s Guide to

Accounting Standards for Private Enterprises in Canada
June 2010

New Accounting Framework for Private Enterprises
Accounting standards for private enterprises in Canada were issued by the Accounting Standards Board in 2009. The standards are effective for annual financial statements relating to fiscal years beginning on or after January 1, 2011. Earlier application is permitted. The standards can be found in Part II of the CICA Handbook — Accounting.

The CICA’s Website on Accounting Standards for Private Enterprises
For the latest information to help you manage the transition to the new accounting standards for private enterprises go to http://www.cica.ca/PE or to the website of your provincial Institute/Ordre. Make sure to subscribe to receive email updates on new resources and information that are added to the website regularly.

About this Guide
The CICA has prepared this reference guide to help you transition to new Canadian accounting standards for private enterprises. This guide provides a comparison of new accounting standards for private enterprises (Part II of the revised CICA Handbook — Accounting) to the XFI version (found in Part V of the CICA Handbook — Accounting).

About the CICA
The Canadian Institute of Chartered Accountants (CICA), together with the provincial, territorial and Bermuda Institutes/Ordre of Chartered Accountants, represents a membership of approximately 75,000 CAs and 12,000 students in Canada and Bermuda. The CICA conducts research into current business issues and supports the setting of accounting, auditing and assurance standards for business, not-for-profit organizations and government. It issues guidance on control and governance, publishes professional literature, develops continuing education programs and represents the CA profession nationally and internationally. The CICA is a founding member of the International Federation of Accountants (IFAC) and the Global Accounting Alliance (GAA).

How the CICA Can Help
The CICA is the recognized leader in providing information and professional education that clarifies and aids in the application of standards in Canada. Chartered Accountants of Canada, through the CICA and the provincial Institutes/ Ordre, are committed to helping you prepare for the transition.

Foreword
Faced with an increasingly demanding economic environment, it is vital that private enterprises in Canada have the opportunity to use accounting standards that respond to their needs and the needs of those who use their financial statements. In 2006, the Accounting Standards Board recognized that one financial reporting framework does not fit all entities. Based on this understanding, the Board developed a strategy tailored specifically to meet the unique reporting needs of Canadian private enterprises. The new standards are derived from standards in the existing CICA Handbook — Accounting. Changes were confined to areas that were identified by stakeholders as being unnecessarily complex. As a result, most of the accounting policies and practices used by private enterprises have not changed. This should make understanding and adopting the new private enterprise standards more straightforward than implementing a completely new accounting framework. These made-in-Canada accounting standards for private enterprises are effective for fiscal years beginning on or after January 1, 2011, and include the option to early adopt. Such enterprises also have the option to adopt International Financial Reporting Standards.

The CICA is pleased to provide this concise reference guide. Changes will be made to address new circumstances and to keep the standards current. the accounting standards for private enterprises will not remain static.Like all standards. businesses and many other stakeholders who contributed to the development of this significant new set of standards. the comparative information it contains will help you become familiar with the revised framework. Used as a starting point. Standards Canadian Institute of Chartered Accountants . easing your efforts to prepare. made up of preparers. auditors and users will work to ensure modifications continue to satisfy the needs of private enterprises and the users of their financial statements. Their insights were instrumental in ensuring that the standards are of the highest quality and meet the needs of the marketplace. I take this opportunity to recognize the efforts of the Non-publicly Accountable Enterprises Advisory Committee. Ron Salole Vice-President. plan and implement the new Canadian accounting standards for private enterprises. business advisors. The newly established Private Enterprise Advisory Committee.

List of Acronyms AcSB: CICA: EIC: Accounting Standards Board (Canada) Canadian Institute of Chartered Accountants Emerging Issues Committee FOME: Framework for Owner Managed Enterprises GAA: Global Accounting Alliance GAAP: generally accepted accounting principles IFAC: IFRSs: International Federation of Accountants International Financial Reporting Standards Provincial Institutes of Chartered Accountants/Ordre des comptables agréés du Québec PICA/Ordre: XFI: Excluding Financial Instruments .

Preface Part I Part II International Financial Reporting Standards accounting standards for private enterprises Part III accounting standards for not-for-profit organizations Part IV accounting standards for pension plans Part V A complete set of the existing Handbook contents .CICA Handbook — Accounting The CICA Handbook — Accounting was restructured to implement the Accounting Standards Board strategy to adopt different sets of standards for different categories of entities.

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Contents The Evolution of New Accounting Standards for Private Enterprises Who is Affected? Key Changes Preparing for the Transition Options under Accounting Standards for Private Enterprises Timing Implementing Accounting Standards for Private Enterprises Getting Involved Resources Available from Chartered Accountants of Canada Summary Comparison of New Accounting Standards for Private Enterprises About this Comparison 1 3 5 9 11 11 12 13 14 15 16 .

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The Differential Reporting Advisory Committee was created to provide a private enterprise perspective into the standards setting process. 2000: 2002: 2006: . Differential reporting became effective for private entities that met certain conditions. requiring a reconsideration of accounting standards for private enterprises. Stakeholder consultation revealed that while most of the existing standards met their needs. The AcSB’s decision to adopt International Financial Reporting Standards (IFRSs) for publicly accountable enterprises changed the overarching system in which differential reporting was embedded. The AcSB therefore conducted further research into the needs of users of private enterprise financial statements. some areas included unnecessary complexities. Financial Reporting by Small Business Enterprises that concluded standards were becoming overly complex for smaller. Here are some significant milestones in the decade leading up to the approval of standards for private enterprises: 1999: The Accounting Standards Board (AcSB) issued a research report. privately held companies.The CICA’s Guide to Accounting Standards for Private Enterprises in Canada 1 The Evolution of New Accounting Standards for Private Enterprises The need for financial reporting standards that meet the unique needs of private enterprises is not new. 2007: The AcSB issued an Invitation to Comment and an accompanying Discussion Paper to solicit input on the best approach for the development of standards for private enterprises. The AcSB was told disclosure requirements were becoming overwhelming and costly to prepare.

to provide input on the development of the standards and propose solutions to address the issues identified through the 2006 research. The AcSB established the Private Enterprise Advisory Committee to provide insight into areas of the standards that require improvement. made up of preparers. New accounting standards for private enterprises were issued in December. 2010: The new accounting standards for private enterprises are incorporated into the Handbook as Part II. 2008: The AcSB made the decision to establish “madein-Canada” financial reporting standards for private enterprises. The AcSB established an advisory committee. which is familiar to many users. additional topics that should be addressed and issues arising in practice where implementation guidance might be helpful. The approval of new standards gives Canadian private enterprises the option of using accounting standards developed specifically for their unique needs or IFRSs. 2009: . The AcSB issued an Exposure Draft on the proposed generally accepted accounting principles (GAAP) for private enterprises. The standards reduced measurement complexities of those areas identified by stakeholders as problematic and significantly reduced disclosure requirements. auditors and users of private enterprise financial statements. based on the standards in the existing CICA Handbook – Accounting (Handbook).2 The CICA’s Guide to Accounting Standards for Private Enterprises in Canada The CICA invited comment on a proposed accounting Framework for Owner Managed Enterprises (FOME). This approach was influenced in part by the response to the FOME. The standards are built from the existing Handbook.

outstanding and traded in a public market (a domestic or foreign stock exchange or an over-the-counter market. credit unions. Other entities may also hold assets in a fiduciary capacity for a broad group of outsiders because they hold and manage financial resources entrusted to them by clients. There are no qualifiers such as unanimous consent from shareholders.The CICA’s Guide to Accounting Standards for Private Enterprises in Canada 3 Who is Affected? Any private enterprise can adopt the new standards. or holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses. other than a not-for-profit organization. or is in the process of issuing. including local and regional markets). . nor an entity in the public sector. or a government or other entity in the public sector. or will be. may be the case for travel or real estate agents. mutual funds and investment banks typically meet the second criterion above. for example. co-operative enterprises requiring a nominal membership deposit or sellers that receive payment in advance of delivery of the goods or services. debt or equity instruments that are. insurance companies. securities brokers/dealers. However. that: (i) has issued. A private enterprise is a profit-oriented entity that is not a publicly accountable enterprise. if they do so for reasons incidental to a primary business (as. A publicly accountable enterprise is an entity. (ii) Banks. customers or members not involved in the management of the entity. The following definition of the term publicly accountable enterprise has been adopted for the purposes of determining which Part of the CICA Handbook – Accounting applies to a reporting entity. that does not make them publicly accountable. such as utility companies).

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The impact of adopting Section 3856 will depend on whether or not the enterprise previously used the XFI version of the Handbook. and stock-based compensation. Retaining the choices Differential reporting options currently available to private enterprises are retained. there is an option to measure other financial instruments at fair value if a private enterprise wishes. Only equities quoted in an active market and free-standing derivatives are required to be measured at fair value.The CICA’s Guide to Accounting Standards for Private Enterprises in Canada 5 Key Changes The accounting standards for private enterprises contain many parts of the existing Handbook that stakeholders indicated did not cause significant concerns. goodwill. Private enterprises continue to have a choice on how to account for investments in subsidiaries. development costs. Notable simplifications were also made to the accounting for asset retirement obligations. Important changes have been made to simplify the process and better meet the needs of the marketplace. Some key changes are as follows: Simplification in measurement A significant area of simplification that will affect many private enterprises is financial instruments. A new standard (Section 3856) was developed to replace the various financial instrument sections in the existing Handbook. . significantly-influenced investees and joint ventures. employee future benefits. Section 3856 requires most financial instruments to be measured at cost (or amortized cost). The standard also covers a number of other important aspects of accounting for financial instruments. However. They will also continue to have the choice of whether to use the future income taxes method or taxes payable to account for income taxes.

. To facilitate compliance with disclosure requirements. the Abstracts have not been carried forward to the new standards. As a result. the overall approach is retroactive application. To ensure that the entity’s first set of financial statements prepared under the new standards is transparent for users and comparable over all periods presented. the standards include a Compilation of Disclosure Requirements that reproduces all of the specific disclosure requirements contained in the standards. reconciliations and detailed breakdowns of balance sheet and income statement numbers. there are fewer requirements for disclosure of assumptions. parts of 29 Abstracts were considered to contain significant guidance that was important for private enterprises and this guidance has been incorporated in the standards.6 The CICA’s Guide to Accounting Standards for Private Enterprises in Canada Disclosure requirements Required note disclosures have been significantly reduced so as to focus on the needs of the users of private enterprise financial statements. However. operating results and cash flows and to help users gauge when to ask for more information on specific issues or transactions. In particular. These are identified in the comparison on pages 18-36. the AcSB concluded that it would not be appropriate to include the type of detailed guidance contained in the Emerging Issues Committee (EIC) Abstracts. First-time Adoption. This means that the financial statements have to be restated in accordance with the new standards and presented as if the entity has always applied these standards. Emerging Issues Committee Abstracts In creating a principles-based financial reporting system. First-Time Adoption The guidance for first-time adoption is contained in Section 1500. the cost of preparing financial statements is lower but sufficient information is provided to give fair presentation of an enterprise’s financial position. Therefore.

2010 using the new standards. it will be required to present its 2010 comparative financial statements using the new standards. it needs to disclose an opening balance sheet as at January 1. a reconciliation showing all the changes to the January 1. In addition. . For example. Section 1500 provides exemptions from the general retrospective application requirement for certain specific areas. These are for areas where changes would involve hindsight. although no changes were made to Section 3840. not to restate such prior transactions. Section 1500 requires the financial statements to show the comparative year prepared on the same basis. Section 1500 allows the company. first-time adoption of the new standards will generally be straightforward. As a result of these exemptions. in some cases retrospective application may lead to costs that outweigh the benefits. In order for the user to be able to understand the changes when the new standards are adopted. for an entity’s 2011 calendar year end.The CICA’s Guide to Accounting Standards for Private Enterprises in Canada 7 However. a company may not have recorded past related party transactions in accordance with Section 3840. 2010 retained earnings as a result of adopting these standards and a reconciliation of the 2010 net income. Disclosure of changes to the opening retained earnings and a reconciliation of the prior year net income is also required. For example. on first-time adoption. Related Party Transactions. Section 1500 also includes specific prohibitions to the general retrospective application requirement.

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The implications will also depend on the entity’s transactions. IFRSs or New Accounting Standards for Private Enterprise? Once an entity is familiar with the private enterprise standards it can decide whether adopting the new standards or IFRSs best meets its needs. whether the entity adopts IFRSs or accounting standards for private enterprises may be influenced by its industry practice or norm. As such. XFI. becoming familiar with the applicable standards should be the first step. For example. Questions to consider include the following: What are the Users’ Needs and Expectations? Users of the entity’s financial statements may want the entity to report on the same basis as its peers in order to maintain comparability. What Financial Reporting Standards are Used by the Consolidated Group? If the entity reports to a foreign parent that complies with IFRSs or has a number of subsidiaries that report in IFRSs.The CICA’s Guide to Accounting Standards for Private Enterprises in Canada 9 Preparing for the Transition The implications of the transition to the new accounting standards for private enterprises will depend on what accounting standards the entity is currently using: Canadian GAAP. adopting IFRSs may be the preferred choice. are its peers predominately publicly accountable entities or international companies that will be applying IFRSs or does the industry consist primarily of private enterprises that will be adopting private enterprise standards? What are the Entity’s Future Plans? If the entity has plans to go public. International Financial Reporting Standards (IFRSs) or non-GAAP. differential reporting. . it may be appropriate to adopt IFRSs. issue public debt or access foreign financing (debt or equity) over the next few years. Regardless of the entity’s circumstances.

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private enterprises have the option of early adoption.The CICA’s Guide to Accounting Standards for Private Enterprises in Canada 11 Options under Accounting Standards for Private Enterprises Once an entity has decided to adopt accounting standards for private enterprises it should carefully consider the exemptions available under Section 1500. as well as accounting policy choices under the various sections of the new standards going forward. 2011. For example. (This exemption allows a one-time revaluation of fixed assets to fair value and may be desirable to some entities. Entities need to assess whether resources are available to prepare this information in time for 2010 year ends. an entity may choose to apply fair value to its fixed assets. Timing Although the private enterprise standards are effective for years beginning on or after January 1. First-time Adoption. Of course the decision to early adopt will affect the entity’s transition timeline. One-time disclosure and presentation requirements for the entity’s first set of financial statements issued under the new standards need planning and preparation. The entity should also consider which exemptions in Section 1500 it may want to select. An entity may wish to adopt the standards for its 2010 year end in order to take advantage of simplification to areas such as employee future benefits or reduced disclosure requirements.) .

Communicate the differences in the financial statements with key stakeholders such as bankers and shareholders. Determine the required training and impact on the entity’s human and other resources (e. Consider the impact on other areas of business such as debt covenants. 7. 2. 5. 6. Use the Compilation of Disclosure Requirements in Part II of the CICA Handbook – Accounting. Draft the notes to the financial statements rather than adapting existing notes to new requirements. 3. information technology systems to capture and produce the required information). This will ensure the entity is not just adding to the notes but is benefiting from the reduction in disclosure. First-time Adoption and assess options.g. banking agreements and employee bonuses. Identify the person or team of people who will be implementing the new standards. Review Section 1500. Review the entity’s financial statement items and transactions and become familiar with the applicable sections of the standards in order to determine the magnitude of change from current financial statements.12 The CICA’s Guide to Accounting Standards for Private Enterprises in Canada Implementing Accounting Standards for Private Enterprises While implementation of the new standards will differ from entity to entity depending on the type of transactions and the existing set of accounting standards used. there are some basic steps to follow: 1. . 4.

A national advisory committee has been established to provide ongoing insight. Constituents are encouraged to contact the committee to suggest areas that should be considered: Greg Edwards.204-3412 . financial statement preparers and accounting professionals.edwards@cica.ca Telephone: 416. including exposure of draft proposals for comment. They will also identify issues arising in practice where implementation guidance might be helpful. Committee members will advise the AcSB on areas within the framework that require improvement and additional topics that should be addressed. CA Principal Accounting Standards Board 277 Wellington Street West Toronto ON M5V 3H2 Canada Email: greg. Any changes to the standards will go through the AcSB’s normal due process. The Private Enterprise Advisory Committee is comprised of volunteers from across Canada who represent a cross-section of stakeholders including financial statement users.The CICA’s Guide to Accounting Standards for Private Enterprises in Canada 13 Getting Involved The Accounting Standards Board is committed to ensuring that accounting standards for private enterprises keep pace with the dynamic and changing needs of this vital segment of the Canadian economy.204-3462 Fax: 416.

14 The CICA’s Guide to Accounting Standards for Private Enterprises in Canada Resources Available from Chartered Accountants of Canada The CICA.cica. We hope this guide helps you by providing a high-level comparison of the new standards to the XFI version of Part V of the CICA Handbook – Accounting. Other resources include: • • Getting Familiar with new Canadian Accounting Standards for Private Enterprises – a free webinar Accounting Standards for Private Enterprises FAQ For more information visit the www. provide information and learning opportunities to assist members and the broader business community develop the knowledge and expertise they need to excel in their professional capacities.ca/PE or your provincial Institute/Ordre website. . along with the provincial Institutes/Ordre.

Summary Comparison of New Accounting Standards for Private Enterprises (Part II of the revised CICA Handbook — Accounting) to XFI Version (Part V) .

This document should not be used in preparing financial statements. A compilation of disclosure requirements is also provided in Part II of the Handbook. This document provides a high-level comparison of accounting standards for private enterprises (Part II) and the XFI version of Part V of the CICA Handbook – Accounting (Handbook). users of this comparison must refer to the standards themselves. . Income Statement.16 The CICA’s Guide to Accounting Standards for Private Enterprises in Canada About this Comparison As of December 31. 2009 This comparison has been prepared by the staff of the Accounting Standards Board (AcSB) and has not been approved by the AcSB. Presentation and disclosure requirements are not within the scope of this comparison. and Section 1540. Section 1521. Cash Flow Statement. Presentation requirements for Part II are provided in Section 1520. To understand fully the implications of preparing financial statements in accordance with Part II of the Handbook. Balance Sheet. It covers significant recognition and measurement differences only and does not necessarily include all of the differences that might arise in a particular entity’s circumstances.

2009. Emerging Issues Committee (EIC) Abstracts of Issues Discussed have been excluded from Part II but in a limited number of instances. are not considered “differences” for the purpose of this comparison.The CICA’s Guide to Accounting Standards for Private Enterprises in Canada 17 The standards in Part II and the XFI Version of Part V of the Handbook are based on common conceptual frameworks. guidance on significant issues addressed in EIC Abstracts has been incorporated into Part II. Part V of the Handbook was used as a starting point in developing the standards in Part II. Similar requirements compiled in a single standard in Part II that were previously reflected in two or more standards in Part V. This comparison is organized according to Handbook Sections and Accounting Guidelines and reflects standards issued as of December 31. Standards in Part V that are largely irrelevant to the private enterprise sector have been excluded from Part II and a limited number of issues that have caused significant concern for private enterprises have been reconsidered. . The term “converged” has been used in the comparison when the standards in Part II are substantially the same as the relevant standards in the XFI version of Part V. However. the majority of the recognition and measurement requirements in Part V of the Handbook do not cause significant concern for private enterprises and have been retained in Part II “as is”.

General Standards of Financial Statement Presentation — Section 1500.18 The following table of concordance relates each accounting standard for private enterprises in Part II of the CICA Handbook — Accounting. General Standards of Financial Statement Presentation Section 1400. Section 1400. No corresponding standard in Part II. Part II. Financial Statement Concepts Section 1100. . Part II. Financial Statement Concepts Section 1100. Part II. First-time Adoption No corresponding standard in XFI standards. is converged with XFI Section. Differential Reporting — N/A None The CICA’s Guide to Accounting Standards for Private Enterprises in Canada Section 1400. A difference may be significant to a particular transaction or entity depending on its materiality or nature. The table does not include differences in disclosure requirements. to the corresponding standard in XFI version of Part V. has been redrafted to be consistent with the content of Part II. Generally Accepted Accounting Principles Not significant Section 1300. Generally Accepted Accounting Principles Section 1100. is converged with XFI Section. Section 1100. is converged with XFI Section. Part II. Significant on first-time adoption of accounting standards for private enterprises in Part II * The assessment of significance of differences is a judgment made by AcSB staff in general terms. Comparison of accounting treatments Section 1000. Section 1000. None Significance* of differences Handbook standards Part V (XFI) Handbook standards Part II Section 1000.

permits certain accounting policy choices to be changed without meeting the criterion in 1506. Current Assets and Current Liabilities None 19 . Disclosure of Accounting Policies Section 1506. is converged with XFI Section. Section 1510. Disclosure of Accounting Policies Section 1505. Measurement Uncertainty Section 1508.13).09). Part II: • EIC-59 (see 1510. Measurement Uncertainty N/A The CICA’s Guide to Accounting Standards for Private Enterprises in Canada Section 1510. except that Section 1506. which are outside the scope of this summary comparison. and • Section 3040 (see 1510. Part II: • Section 3000 (see 1510. Accounting Changes Significant Section 1508.07). Handbook standards Part II Significance* of differences Section 1505. Part II. The following Sections in Part V have been incorporated into Section 1510. All requirements in this Section relate to disclosures.14). Accounting Changes Section 1506. and • EIC-122 (see 1510. N/A Section 1506. Part II. Certain guidance from the following EIC Abstracts has been included in Section 1510. Current Assets and Current Liabilities Section 1510. Part II.06). is converged with XFI Section. which are outside the scope of this summary comparison.Handbook standards Part V (XFI) Comparison of accounting treatments All requirements in this Section relate to disclosures.06 of providing more relevant or reliable information (see 1506.

This presentation Section reflects balance sheet presentation requirements from other Sections – presentation is outside the scope of this summary comparison. is converged with XFI Section. . Section 1540. Section 1582 is effective on adoption of Part II as Part II does not include Section 1581. Business Combinations Section 1582. all enterprises must provide a cash flow statement. However. Income Statement — Section 1521. Balance Sheet Section 1535. Cash Flow Statement Section 1582. Income Statement Section 1520. under Part II. N/A N/A Handbook standards Part II Significance* of differences Section 1520. Business Combinations Section 1582.20 Handbook standards Part V (XFI) Comparison of accounting treatments This presentation Section reflects income statement presentation requirements from other Sections – presentation is outside the scope of this summary comparison. Cash Flow Statement Section 1540. is converged with XFI Section. No corresponding standard in Part II. Part II. Capital Disclosures — N/A Significant for enterprises that do not provide a cash flow statement under XFI standards Significant for enterprises adopting Part II prior to 2011 The CICA’s Guide to Accounting Standards for Private Enterprises in Canada Section 1540. Part II.

or using either the cost or equity method. Part II.43-44). Noncontrolling Interests Section 1602. Significant for enterprises adopting Part II prior to 2011 Not significant The CICA’s Guide to Accounting Standards for Private Enterprises in Canada Section 1625. This is consistent with the differential reporting option in XFI Section. Section 1601. Subsidiaries Section 1601. Part II. Under Section 1590. Part II. is converged with XFI Section. except as noted below. Subsidiaries Section 1590. an enterprise may account for subsidiaries by consolidating them. Section 1602 is effective on adoption of Part II as Part II does not include Section 1600. Consolidated Financial Statements None Section 1602.Handbook standards Part V (XFI) Comparison of accounting treatments Section 1590. Comprehensive Revaluation of Assets and Liabilities 21 . Handbook standards Part II Significance* of differences Significant for a subsidiary that would now be accounted for at fair value rather than cost Section 1590. Section 1625. Consolidated Financial Statements Section 1601. Part II. Noncontrolling Interests Section 1602. However an investment in a subsidiary whose equity securities are quoted in an active market is not accounted for at cost. Comprehensive Revaluation of Assets and Liabilities Section 1625. Part II. is converged with XFI Section. but may be accounted for at fair value. is converged with XFI Section. is converged with XFI Section except for the accounting for income tax benefits (see 1625.

Part II. rather than in Section 1651.16-.07). Part II. Part II. Interim Financial Statements — The CICA’s Guide to Accounting Standards for Private Enterprises in Canada Section 1800.22 Handbook standards Part V (XFI) Comparison of accounting treatments Section 1651. is converged with XFI Section. Temporary Investments — Significant Section 3020. Segment Disclosures — Section 1751. Unincorporated Businesses Section 3000. Guidance from XFI Section incorporated in Section 1510. No corresponding standard in Part II.19). Foreign Currency Translation Section 1701. Part II (see 3856. Measurement and impairment requirements are provided in Section 3856. Accounts and Notes Receivable — N/A . Part II Handbook standards Part II Significance* of differences Section 1650. No corresponding standard in Part II. and differs from XFI Section 1650. except for hedge accounting addressed in Section 3856. Hedge accounting (other than a hedge of an investment in a self-sustaining foreign operation) is addressed in Section 3856. Part II. is converged with XFI Section 1650. N/A Section 3010. Part II. N/A N/A None None. No corresponding standard in Part II. Cash — No corresponding standard in Part II. Part II. Guidance from XFI Section incorporated in Section 3856. Part II (see 1510. Designation as “temporary” is no longer relevant. No corresponding standard in Part II. Foreign Currency Translation Section 1651. Unincorporated Businesses Section 1800. Section 1800. Financial instruments are classified as current if they meet the requirements in Section 1510.

Part II (see 1510. Guidance provided in Section 3856. When measurement of impairment is based on recoverable amounts. these estimates are discounted using market interest rates rather than the original effective interest rate. None Often not significant Handbook standards Part II Significance* of differences Section 3025. Inventories Section 3031. Prepaid Expenses — N/A 23 .06). Inventories The CICA’s Guide to Accounting Standards for Private Enterprises in Canada Section 3040. differs from that in Section 3025 (see 3856.Handbook standards Part V (XFI) Comparison of accounting treatments No corresponding standard in Part II.19) in that alternative measurements are possible. is converged with XFI Section. Part II. No corresponding standard in Part II. Impaired Loans — Section 3031. Section 3031. Guidance from XFI Section incorporated in Section 1510. Part II.16-.

an investment in a significantly influenced investee whose equity securities are quoted in an active market is not accounted for at cost but may be accounted for at fair value. an investment in an equity security that is traded in an active market and not subject to significant influence is accounted for at fair value rather than at cost. Part II. Part II differs from XFI Section 3050. Under Section 3856. Part II. The impairment provisions in Section 3051. an enterprise may account for significantly influenced investees using either the cost or equity method. Long-term Investments Section 3051. Investments . However.24 Handbook standards Part V (XFI) Comparison of accounting treatments Section 3051. Significant differences are noted below. Handbook standards Part II Significance* of differences The CICA’s Guide to Accounting Standards for Private Enterprises in Canada Section 3050. Part II. This is consistent with the differential reporting option in XFI Section 3050. Significant Under Section 3051. are consistent with those in Section 3856. Part II.

However an investment in a joint venture whose equity securities are quoted in an active market is not accounted for at cost but may be accounted for at fair value. Impairment of Longlived Assets 25 . Impairment of Long-lived Assets Section 3063.Handbook standards Part V (XFI) Comparison of accounting treatments Section 3055. the cost method or the equity method. Interests in Joint Ventures Section 3055. Property Plant and Equipment Section 3061. Part II. Under Section 3055. Part II. Property Plant and Equipment The CICA’s Guide to Accounting Standards for Private Enterprises in Canada Section 3063. Part II. Part II. Interests in Joint Ventures Section 3061. differs from XFI Section. None None Significant Handbook standards Part II Significance* of differences Section 3055. is converged with XFI Section. are consistent with those in Section 3856. an enterprise may account for interests in joint ventures using proportionate consolidation. Significant differences are noted below. Section 3061. Part II. Part II. The impairment provisions in Section 3055. This is consistent with the differential reporting options in XFI Section. is converged with XFI Section. Section 3063.

Significant differences are noted below. Part II.26 Handbook standards Part V (XFI) Comparison of accounting treatments Section 3064. Section 3064. This is consistent with the differential reporting option in XFI Section. Part II (see 3064. Part II differs from XFI Section. Part II. Significant Internally developed intangible assets Section 3064. Handbook standards Part II Significance* of differences The CICA’s Guide to Accounting Standards for Private Enterprises in Canada Section 3064. Certain guidance from EIC-133 has been incorporated in Section 3064. Part II. requires goodwill impairment testing to be done at the reporting unit level. removing the requirement in XFI Section to determine fair values of individual assets and liabilities. permits an enterprise to make an accounting policy choice to capitalize or expense development costs. Goodwill and Intangible Assets Section 3064. rather than each year. Goodwill and Intangible Assets .68). Goodwill and other intangible assets – impairment testing Section 3064. requires enterprises to test goodwill and other intangible assets not subject to amortization on an events and circumstances basis.

is converged with XFI Section. Certain guidance from the following EIC Abstracts has been incorporated into Section 3065.25 and Illustrative Example 5). Leases Section 3065.27). Part II. • EIC-52 (see 3065. • EIC-21 (see 3065. except that the requirements for (a) removing a lease liability from a lessee’s balance sheet.26). rather than at fair value. Part II. Part II. Part II. Guidance provided in Section 3856. are consistent with those in Section 3856. Under Section 3110.Handbook standards Part V (XFI) Comparison of accounting treatments Section 3065. Part II.64 and Illustrative Examples 3 and 4). Leases Section 3110. is converged with XFI Section except that the measurement requirements have been simplified. Part II. asset retirement obligations are measured at the best estimate of the expenditure required to settle the present obligation at the end of the reporting period. Asset Retirement Obligations Section 3110. • EIC 25 (see 3065. No corresponding standard in Part II. Long-term Debt — 27 . Section 3110. and (b) the impairment testing of lease receivables of a lessor in Section 3065. and • EIC-97 (see 3065. Part II: • EIC-19 (see 3065. Asset Retirement Obligations The CICA’s Guide to Accounting Standards for Private Enterprises in Canada Section 3210. N/A Significant Handbook standards Part II Significance* of differences Not significant Section 3065.03(r).

07-. Section 3260.27). is converged with XFI Section. Surplus Section 3251.28). Certain guidance from the following EICs has been incorporated into Section 3400. None N/A Handbook standards Part II Significance* of differences Section 3240. Contingencies None None Section 3400. Certain guidance from EIC-132 has been incorporated into Section 3251. Contingencies Section 3290. Part II. The scope of Section 3251. which is outside the scope of this summary comparison. Part II: • EIC-78 (see 3400.25-. • EIC-123 (see 3400. Share Capital Section 3240. Section 3400. None N/A All requirements in this Section relate to presentation.22). is broader than XFI Section 3250. All requirements in this Section relate to disclosures. Revenue Section 3400. • EIC-141 (see 3400.23-.24). Contractual Obligations Section 3280. Equity Section 3260.17). which are outside the scope of this summary comparison. Part II (see 3251. Reserves The CICA’s Guide to Accounting Standards for Private Enterprises in Canada Section 3280.011). Part II. Contractual Obligations Section 3290. Revenue .10). is converged with XFI Section. • EIC-79 (see 3400. is converged with XFI Section. Section 3290. Part II. • EIC-142 (see 3400. • EIC-144 (see 3400. and • EIC-156 (see 3400. Part II. Share Capital Section 3250.10). Part II.28 Handbook standards Part V (XFI) Comparison of accounting treatments Section 3240. is converged with XFI Section. Reserves Section 3260.

Employee Future Benefits The CICA’s Guide to Accounting Standards for Private Enterprises in Canada 29 . Employee Future Benefits Section 3461. the funded status of the plan is recognized on the balance sheet and there is no deferral or amortization of actuarial gains and losses or past service costs. Section 3461.Handbook standards Part V (XFI) Comparison of accounting treatments Section 3461. which requires a separate valuation for accounting purposes and deferral and amortization is required for past service costs and permitted for actuarial gains and losses. Part II differs from XFI Section. The difference is not expected to be significant for most private enterprises. The definition of a defined benefit and defined contribution plan has been modified.” whereby the accounting is based on a funding valuation. or • the “deferral and amortization approach” as in the XFI Section. Significant Handbook standards Part II Significance* of differences Section 3461. permits defined benefit plans to be recognized and measured using either: • an “immediate recognition approach. Part II.

No corresponding standard in Part II.65). Part II. None None Handbook standards Part II Significance* of differences Section 3465. Disposal of Long-lived Assets and Discontinued Operations Section 3480. Certain guidance from the following EIC Abstracts has been incorporated into Section 3465. Capital Transactions Section 3610.30 Handbook standards Part V (XFI) Comparison of accounting treatments Section 3465. Income Taxes Section 3465.75). is converged with XFI Section. Section 3475. Section 3800. This is consistent with the differential reporting option in XFI Section. either the taxes payable method or the future income taxes method may be chosen. Under Section 3465. is converged with XFI Section. Capital Transactions Section 3610. Income Taxes The CICA’s Guide to Accounting Standards for Private Enterprises in Canada Section 3475. Disposal of Long-lived Assets and Discontinued Operations No corresponding standard in Part II. Section 3800. Extraordinary Items — N/A N/A None None Section 3500. is converged with XFI Section. Part II. and • EIC-146 (see 3465. Section 3475. Part II. Government Assistance Section 3800. is converged with XFI Section. Part II: • EIC-104 (see 3465. Part II. Part II. Earnings per Share — Section 3610. Government Assistance .

Certain guidance from the following EIC Abstracts has been incorporated into Section 3840. Part II: • EIC-66 (see 3840. Part II.Handbook standards Part V (XFI) Comparison of accounting treatments Section 3805.33). All requirements in this Section relate to disclosures. Section 3831. Economic Dependence Section 3841. Subsequent Events Section 3831. is converged with XFI Section. Part II. and • EIC-103 (see 3840. Subsequent Events Section 3820. Economic Dependence N/A The CICA’s Guide to Accounting Standards for Private Enterprises in Canada Section 3850. is converged with XFI Section. Investment Tax Credits Section 3820. Interest Capitalized Section 3850. • EIC-77 (see 3840. is converged with XFI Section.44(b)). None None None None Section 3820. Part II. Interest Capitalized N/A 31 . which are outside the scope of this summary comparison. Related Party Transactions Section 3840. All requirements in this Section relate to disclosures. Handbook standards Part II Significance* of differences Section 3805. Nonmonetary Transactions Section 3840. Non-monetary Transactions Section 3831.44(a)).38). • EIC 89 (see 3840. Part II. Related Party Transactions Section 3841. is converged with XFI Section. which are outside the scope of this summary comparison. Investment Tax Credits Section 3805. Section 3840.

other than those in qualifying hedges. Part II. with changes recognized in net income. • All financial instruments are recognized on trade date. Handbook standards Part II Significance* of differences The CICA’s Guide to Accounting Standards for Private Enterprises in Canada — Section 3856. AcG-4. correspond to or replace guidance in Sections 3020. differs from equivalent requirements under XFI standards. Transaction costs on financial instruments measured at fair value are expensed. • Transaction costs on financial instruments measured at amortized cost are capitalized. include the following: • Investments in equities that are traded in an active market are measured at fair value. and detachable from. continue to be measured at fair value. financial liabilities may be measured at zero. Part II. Part II. An entity may also irrevocably elect on initial recognition to measure any other financial instrument at fair value. • A single model is applied to the recognition and measurement of impairment for all financial assets. Derivatives.32 Handbook standards Part V (XFI) Comparison of accounting treatments Section 3856. Significant The significant differences between the guidance on financial instruments in XFI standards and Section 3856. 3025. AcG-12 and AcG-13. • The equity component of convertible debt and warrants or options issued with. Financial Instruments . The requirements in Section 3856. 3210. 3860.

Guidance provided in Section 3856. • AcG-4 (see 3856. • EIC-88.29).). N/A Handbook standards Part II Significance* of differences The CICA’s Guide to Accounting Standards for Private Enterprises in Canada Section 3860. Accounting Guidelines and EIC Abstracts and has been included in Section 3856.14).07). • EIC-149 (see 3856.20-.19).23). (This is consistent with the differential reporting option in XFI Section 3860.19).36). Part II. Part II: • Section 3020 (see 3856.30-. 96 and 101 (see 3856.) Certain guidance from the following Sections. and • EIC-158 (see 3856.Handbook standards Part V (XFI) Comparison of accounting treatments • Hedge accounting is available by designation for relationships specified in the Section if the critical terms of the hedging instrument match those of the hedged instrument.16-.16-. • AcG-12 (see 3856. • Section 3025 (see 3856. • Preferred shares issued in a specified tax planning arrangement must be classified as equity. Appendix B. Financial Instruments – Disclosure and Presentation — 33 .26-. No corresponding standard in Part II. • AcG-13 (see 3856.

Financial Reporting by Property and Casualty Insurance Companies — . Futureoriented Financial Information — Section 4400. N/A N/A N/A Handbook standards Part II Significance* of differences Section 3870. The accounting standards for pension plans can be found in Part IV. Franchise Fee Revenue None N/A AcG-3.e. differs from XFI Section.. the ability to ignore volatility in measuring stock-based compensation) with the calculated value method. Under the calculated value method an enterprise estimates the volatility that is used as an input to a stock option pricing model based on an appropriate sector index. No corresponding standard in Part II. Significant Section 3870. No corresponding standard in Part II. N/A AcG-2. AcG-2. Life Insurance Enterprises – Specific Items — Section 4250.34 Handbook standards Part V (XFI) Comparison of accounting treatments Section 3870. Pension Plans — The CICA’s Guide to Accounting Standards for Private Enterprises in Canada Section 4211. Part III has been reserved for the accounting standards for not-forprofit organizations. Franchise Fee Revenue AcG-2. Not-forprofit Organizations — No corresponding standard in Part II. No corresponding standard in Part II. Stockbased Compensation and Other Stock-based Payments Section 4100. is converged with XFI Guideline. Part II. Stock-based Compensation and Other Stock-based Payments Section 3870. replaces the minimum value method (i. No corresponding Guideline in Part II. Part II. Part II.

36). is converged with XFI Guideline.Handbook standards Part V (XFI) Comparison of accounting treatments No corresponding Guideline in Part II. Disclosure of Guarantees None 35 . Appendix B).30-. Guidance provided in Section 3856. Part II. Enterprises in the Development Stage — N/A N/A AcG-12. The Management Report — AcG-8.07). Disclosure of Guarantees AcG-14. AcG-14. N/A No corresponding Guideline in Part II. Part II (see 3856. N/A N/A Handbook standards Part II Significance* of differences AcG-4. Financial Reporting by Life Insurance Enterprises No corresponding Guideline in Part II. Actuarial Liabilities of Life Insurance Enterprises – Disclosure No corresponding Guideline in Part II — AcG-9. — N/A AcG-11. Fees and Costs Associated with Lending Activities — AcG-7. Guidance provided in Section 3856. Hedging Relationships — The CICA’s Guide to Accounting Standards for Private Enterprises in Canada AcG-14. Guidance provided in Section 3856. Part II (see 3856. No corresponding Guideline in Part II. Part II (see 3856. AcG-13. No corresponding Guideline in Part II. Transfers of Receivables — No corresponding Guideline in Part II.

is converged with XFI Guideline. Oil and Gas Accounting – Full Cost AcG-16. is converged with XFI Guideline. Part II. AcG-18. which are outside the scope of this summary comparison. Part II. Oil and Gas Accounting – Full Cost AcG-17. Part II. Disclosures by Entities Subject to Rate Regulation AcG-19. None AcG-16. AcG15. Equity-linked Deposit Contracts — AcG-18.36 Handbook standards Part V (XFI) Comparison of accounting treatments AcG-15. None N/A None Handbook standards Part II Significance* of differences AcG-15. Investment Companies The CICA’s Guide to Accounting Standards for Private Enterprises in Canada AcG-19. Part II. Consolidation of Variable Interest Entities AcG-16. Investment Companies AcG-18. Consolidation of Variable Interest Entities AcG-15. does not apply to an enterprise that chooses to prepare non-consolidated financial statements. All requirements in this Guideline relate to disclosures. Disclosures by Entities Subject to Rate Regulation . No corresponding Guideline in Part II. is converged with XFI Guideline.

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