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In March 2018, the Accounting Standards Board (AcSB) issued Section 4434
Intangible Assets Held by Not-for-Profit Organizations in Part III (Accounting Standards for Not-for-Profit Organizations) of the CPA Canada Handbook – Accounting. Section 4434 replaces the existing Section 4432
Intangible Assets Held by Not-for-Profit Organizations.
Section 4434 was issued as part of the AcSB’s program of major improvements to Accounting Standards for Not-for-Profit Organizations (ASNPO) with the purpose of removing redundancies between Part II (Accounting Standards for Private Enterprises) and Part III of the Handbook for intangible assets. As a result, only unique guidance contained in Part III has been carried forward and included in Section 4434 and users of Part III will now be referred to the relevant standards in Part II.
Carried forward to Section 4434 is the accounting policy choice for small organizations with annual revenues less than $500,000 to only make certain disclosures related to intangible assets. However, such not-for-profit organizations (NFPOs) are encouraged to follow all the requirements of Section 4434.
The key changes introduced by Section 4434 relate to the recognition and disclosure of partial impairment on intangible assets:
Section 4434 is effective for annual periods beginning on or after January 1, 2019. Earlier application is permitted. NFPOs apply Section 4434 prospectively to intangible assets acquired on or after the application date, with an exception available. NFPOs that apply this Section for the first time are permitted to recognize an adjustment to opening net assets at the date this Section is first applied, to reflect partial impairments of intangible assets existing at that date. This exception can only be applied to the fiscal year in which Section 4434 is first applied.
The Basis for Conclusions that summarizes the AcSB’s key considerations in reaching its conclusions on this project can be accessed
here. The CPA Canada ASNPO Alert on this topic can be accessed
For more information on the financial reporting library, contact a local
MNP Assurance Professional, or
Jody MacKenzie, Director, Assurance Professional Standards.
This communication contains a general overview of the topic and is current as of April 17, 2019. The application of the principles addressed will depend upon the particular facts and circumstances of each individual case. Accordingly, this publication is not a substitute for professional advice and we recommend that any decisions you take about the application or not of any of the information presented be made in consultation with a qualified professional who can address any variance that may be required to reflect your circumstances. Please contact your local MNP representative for customized assistance with the application of this material. MNP LLP accepts no responsibility or liability for any loss related to any person's use of or reliance upon this material. © MNP LLP 2019. All rights reserved.
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