Background
In September 2023, the AcSB issued amendments to Section 3840, Related Party Transactions. The amendments allowed an option in paragraph 3840.44(b) to either retrospectively restate prior periods when carrying amounts are used to account for a combination under common control, or to prospectively account for these transactions from the date the transfer occurred. The amendments are effective for fiscal years beginning on or after January 1, 2025, with earlier application permitted.
Since issuing the amendments, the AcSB received an application question regarding the comparative figures to be presented, if any, when a transaction is accounted for prospectively from the date the transfer occurred in accordance with paragraph 3840.44(b)(i).
The AcSB considered the application question using its Guidance Framework, and, through discussions with its Private Enterprise Advisory Committee, it is aware of differing views emerging in practice. One view is that an enterprise must identify an acquirer and report the comparative figures of the acquiring entity. Another view is that an enterprise should apply professional judgment to consider the information needs of its financial statement users, and, in some scenarios, there could be no comparative figures presented.
The AcSB considered this feedback and noted that the current language in paragraph 3840.44(b) could infer that determining an acquirer is required when carrying values are used to account for the transaction prospectively from the date that the combination occurred. The Board discussed that identifying an acquirer could be complex or onerous for private enterprises in some scenarios.
The AcSB proposes to amend paragraph 3840.44(b) to address this narrow issue.