Member Advisory
March 2012
Transitioning to Accounting
Standards for Private Enterprises
(ASPE): 10 Questions to Help
Your Practice
By: Patricia Dahm CA
1. Does Your Firm Have an Adequate Knowledge of ASPE?
It is important that all staff are familiar with the new framework in order to recognize the potential
adjustments and disclosure differences. While there are many articles and brochures available
that summarize these differences, it is important that all staff are familiar with and have read Part
II of the CICA Handbook – Accounting Standards for Private Enterprises (ASPE). Many of your
clients may not be aware of the changes to the accounting standards and may have questions
regarding the change. It is important your firm understands not only that the client, as well as the
users of the client’s financial statements, may need your assistance in understanding this
important change, but that in this year of transition more time needs to be spent with the client,
assisting them in making the accounting policy changes, elective exemptions and disclosure
changes that are suitable for the entity. Particular attention should be paid to Section 1500, firsttime adoption (ASPE), and Section 3856, financial instruments, as these sections are brand new.
For those entities that prepare consolidated financial statements or have entered into a business
combination recently, Section 1590 subsidiaries, 1602 consolidated financial statements and 1602
non-controlling interests have significantly changed from pre-changeover standards. However,
Member Advisory is produced jointly by the Institute of Chartered Accountants of Alberta and the Institute of
Chartered Accountants of Saskatchewan and distributed as part of the electronic monthly mailing package.
Opinions expressed in this bulletin are those of the author and do not reflect the official position of ICAA or
ICAS. Any queries regarding this material should be directed to Sean Johnson CA, ICAA Director,
Professional Services at s.johnson@icaa.ab.ca. This bulletin has been posted to the ICAA and ICAS
websites. For additional copies of this advisory, please access
http://www.albertacas.ca/Resources/TechnicalPublications/MemberAdvisory.aspx or contact Chris Pilger,
Director, Member Relations and Communications at c.pilger@icaa.ab.ca or 1-800-232-9406 or
1
(780) 420-2363. In Saskatchewan, please contact Sue James at s.james@icas.sk.ca or (306) 791-4142.
these sections could have been adopted prior to transitioning to ASPE and so, if not previously
adopted, they should be reviewed in detail. Numerous resources and learning opportunities are
available at www.cica.ca/privateenterprises, such as:
•
•
•
•
•
•
Frequently Asked Questions
First-Time Reporting on Financial Statements – Adopting Accounting Standards for
Private Enterprises
ASPE: A Guide to Understanding Transitional Options and Accounting Policy Choices
Accounting Standards for Private Enterprises — Transition Considerations for a NonComplex Entity
The CICA’s Guide to Accounting Standards for Private Enterprises in Canada
Reporting on Financial Statements under Canadian Auditing Standards
2. Does Your Firm Understand the Options Available to its Clients for Reporting on
the Prior Year?
As a result of the transition to ASPE, a new engagement letter will need to be obtained, as a new
framework is being adopted. The prior year comparatives will need to be restated for any
adjustments on transition to the new framework and an opening balance sheet at the transition
date will need to be provided. The adoption of this new framework must be done on a
retrospective basis. The prior report issued by the firm cannot be carried forward as it was
prepared using the pre-changeover accounting framework. As a result, the client can request the
prior period be audited/review under the new framework or that only the current year be reported
on. In the latter case, procedures will still need to be carried out on opening balances. It is
important to determine the client’s requirements and preference, as the engagement letter, as well
as the report issued, will need to be modified based on this decision. Canadian Auditing
Standards (CAS) 710 provides guidance on reporting on either a corresponding (current year
only) or comparative (current and comparative) basis. This guidance can also be applied to review
engagements. Depending on the basis of presentation, the report and the comparative
presentation in the financial statements will change. When comparative information is presented
in the form of comparative financial statements, the level of detail included for those comparative
financial statements is consistent with that of the financial statements of the current period.
Where comparative information is presented on a corresponding basis, the comparative
information amounts and other disclosures for the prior period are included as an integral part of
the current period financial statements, and are intended to be read only in relation to the
amounts and other disclosures relating to the current period. The level of detail presented on the
corresponding amounts and disclosures is dictated primarily by its relevance to the current period
figures. The CICA has a resource at www/cica.ca/privateenterprises entitled First-Time Reporting
on Financial Statements — Adopting Accounting Standards for Private Enterprises, which can be
reviewed for additional guidance.
3. Has Your Firm Obtained the Appropriate Engagement Letter?
Engagement letter templates for the firm will need to be updated to reflect the change in
accounting framework and that the firm has been engaged to either report on the current year or
all years presented. Templates are available in C-PEM as well as in Caseware, for those firms
using this software. Sample engagement letter templates are also available at the CA Store.
2
There are also some excerpts of an audit engagement letter included in the above noted
brochure, First-Time Reporting on Financial Statements—Adopting Accounting Standards for
Private Enterprises Appendix A and C.
4. Has Your Firm Identified All Clients Transitioning to ASPE and Discussed
Transition with Them?
All review and audit clients, other than not-for-profit organizations, should be identified and sorted
by year end. While the financial reporting framework for not-for-profit organizations will change for
year-ends commencing on or after January 1, 2012, these organizations will not be addressed in
this document. Once all clients have been identified, they should be ranked by complexity of
issues that may result from transitioning to ASPE. Clients that have more complex issues to be
resolved should be contacted first, as these clients may require more of the firm’s resources and
may require more time to gather the necessary information to adjust the financial statements on
transition. This will also allow the client to assist with gathering the information that may be
required.
The following table can be used to assist in gathering the necessary information for each client
and organizing the firm’s resources. The table reflects some, but not necessarily all, of the issues
that could create more complexity.
Client
Name
Year
-end
Transition
Date
(First day of
the earliest
comparative
period
shown)
What
Differential
Reporting
currently
used and
will this
change?
Would entity
consider FV
measurement
of PPE on
transition?
What support
for FV is
required?
Does the
entity
have
other
financial
assets to
be measured at
FV?
Will they
elect to
measure
any
financial
assets at
FV?
Does the
entity have
any third
party, low
interest or
interest
free loans
that need
to be
revalued?
Does the
entity have
transaction
costs on
financial
instrument
s that need
to be
accounted
for
differently
under
ASPE?
Any impact
on debt
covenants,
banking
agreements
employee
bonuses or
earn out
agreements
from the
transition?
What
Elective
Exempti
on(s) are
to be
used, if
any?
Other
policy
choices
to
discuss
Date
discu
ssed
with
client
Additional resources available at www/cica.ca/privateenterprises related to the above issues are
as follows:


Financial Instruments
o ASPE: A Guide to Understanding Transitional Options and Accounting Policy
Choices
o Guide To Accounting Standards For Private Enterprises, Chapter 45, Financial
Instruments
Fair Value Measurement of PPE on Transition
o The Fair Value Option in ASPE — Should You Elect for It?
3
Results of
discussion
o
Fair Value of an Entity’s Property, Plant and Equipment for First-Time Adoption of
Accounting Standards for Private Enterprises — A Business Valuator’s Perspective
There are advantages and disadvantages to the fair value adjustment for Property, Plant and
Equipment and the option should be discussed with the client and the eventual decision
documented in the working paper file. Consider the costs involved to complete the fair value
evaluation, any potential impact on bank covenants, implications of extra depreciation and
amortization charges on future earnings if the carrying value of a depreciable asset is
increased, and the impact of the creation of additional temporary differences, as the income
tax base will not change. Also, a large increase in total assets or equity might change any
income tax status, such as minimum tax, etc. Caution is advised on over-emphasizing any
positive impact of the fair value adjustment with lenders, as they normally are already aware
of the fair value amount and the financial statement disclosure will highlight the one-time
nature of this adjustment. While the adjustment may change the debt-to-equity ratio, it does
not change the cash flows or facts of the situation.
Many clients may ask if property tax assessments can be used to determine fair value of a
property at the transition date. Both of the above-noted articles indicate that assessments
would not be sufficient evidence for this valuation, due to limitations in the property tax
assessment process. The firm may want to have copies of these articles available to assist
the client in understanding the type of information that may need to be gathered to determine
fair value.
Other policies that may lead to complex issues include:





Business combinations and consolidations
Stock-based compensation
Asset retirement obligation
Defined pension benefits
Impairment of long-lived assets
Differential reporting options do not exist under ASPE. The following table indicates how these
options have been applied in ASPE. The client may decide to change their policies in these areas
when adopting ASPE; management can select the appropriate accounting policy for the entity
without needing unanimous consent of the shareholders. It should be noted that because
management has a choice between policies in accounting for subsidiaries, income taxes and
investments, the choice made should be included in the significant accounting policies note.
Title / Reference
Brief Description
1
Subsidiaries [1590]
An enterprise may account for subsidiaries by using either the consolidation, cost or equity
method.
2
Income Taxes [3465]
An enterprise is allowed the use of the taxes payable method or the future income taxes
method.
3
Investments [3051]
An enterprise may account for significantly influenced investees using either the cost or equity
method.
4
Interests in Joint Ventures
[3055]
An enterprise may account for interests in joint ventures using proportionate consolidation, the
cost method or the equity method.
5
Goodwill and Intangible
An enterprise is required to test goodwill and other intangible assets not subject to
4
Assets [3064]
amortization on an events and circumstances basis, rather than each year.
6
Share capital [3240]
An enterprise is not required to disclose authorized share capital
7
Financial instruments – fair
value disclosure
Fair value disclosure is only required in specific circumstances
8
Financial instruments –
preferred shares [3856]
There are requirements for the measurement and presentation of preferred shares issued in a
tax planning arrangement
The following elective exemptions are available on first-time adoption of ASPE
1 Fair Value [1500.12]
An entity may elect to measure an item of property, plant and equipment at the date of
transition to ASPE at its fair value and use that fair value as its deemed cost at that date.
2 Related Party Transactions
[1500.25]
An entity is not required to restate assets or liabilities arising from related party transactions
that occurred prior to the date of transition to ASPE. This can be particularly important for
clients who had related party transactions that occurred prior to years beginning on or after
October 1, 1995, when related party measurement became part of GAAP.
3 Business Combinations
[1500.10-.11]
An entity can choose not to apply Section 1582 (Business Combinations) to past business
combinations that occurred before the transition date to ASPE. Note that Section 1582
provides guidance on business combinations that is different from the old standard under
Section 1581. If an entity restates any business combination to comply with Section 1582, it
must also apply Section 1601 (Consolidations) and Section 1602 (Non-controlling Interests).
It should be noted that in January, 2012, Canada’s Accounting Standards Board (AcSB)
approved an amendment to the transition exemption whereby an entity that has chosen not
to restate business combinations that occurred prior to transition to ASPE, will record
goodwill in its opening balance sheet at the amount that the goodwill was carried in its
previous financial statements.
4 Employee Future Benefits
[1500.14-.16]
An entity has the option to recognize all accumulated gains and losses and past service
costs in opening retained earnings at the date of transition to ASPE. Also, an entity can
carry forward unrecognized gains and losses determined previously under Section 3461.
5 Cumulative Translation
Differences [1500.17-.18]
An entity may elect not to apply the recognition and measurement aspects of Section 1651
(Foreign Currency Translation) retrospectively. It has the option to deem the cumulative
translation differences for all foreign operations to be zero. Any existing cumulative
translation difference is recognized in opening retained earnings. It should be noted that in
January, 2012, Canada’s Accounting Standards Board (AcSB) approved an amendment to
the transition exemption such that the cumulative translation amount can be set to zero, no
matter how it arose.
6 Stock-based Compensation
and Other Stock-based
Payments [1500.22-.23]
An entity may elect not to apply the recognition and measurement aspects of Section 3870
(Stock-based Compensation and Other Stock-based Payments) for stock-based payments
granted prior to the date of transition to ASPE.
7 Asset Retirement Obligations
[1500.24]
An entity that has not previously recognized asset retirement obligations, Section 3110
(Asset Retirement Obligations) may either measure the obligation in accordance with
Section 3110 or at an estimated amount at the date of transition to ASPE, based on the
original and remaining life of the asset.
8 Financial Instruments
[1500.19-.21]
Section 3856 (Financial Instruments), requires an entity to classify separately the
components of a financial instrument that has a liability and equity component. An entity
does not have to separate the components if the liability component is no longer
outstanding at the transition date. Also, the entity is permitted to designate any financial
asset or financial liability to be measured at fair value.
The first three exemptions listed above will likely be more prevalent, with the related party
transactions exemption being the most advantageous for entities that have been in existence prior
to 1996. Even where there are no adjustments to the financial statements on transition to ASPE,
an entity may still want to elect to use the related party transaction exemption.
5
Section 1500 First Time Adoption allows the entity to designate any financial asset or liability to be
measured at fair value. This exemption may be important for an entity that has bonds or mutual
funds that management would like to be measured at fair market value. Section 3856 Financial
Instruments allows the entity to designate any bonds purchased after transition to be recorded at
fair market value. This election must be made at time of purchase and is irrevocable.
Where there is an impact to the client with respect to compliance with debt covenants or banking
agreements, the client will need to discuss the matter with their lender. The CICA has developed
a brochure to assist with dealing with lenders. This brochure, entitled ASPE – What Lenders Need
to Know, is located at www/cica.ca/privateenterprises. There is also a PDF, printable version of
the brochure available on-line.
5. Have Any Independence Threats Been Identified and Have Appropriate Safeguards
Been Put in Place?
There could be significant policy choices and accounting matters to assess on the transition to
ASPE. Although the financial statements and all accounting policy choices are the clients’
responsibility, it would be natural for them to seek advice from their practitioner. In review and
audit engagements, where independence is required, providing advice and assisting in the
implementation of ASPE may create a serious threat to your independence. It is absolutely
necessary to assess the competence and the ability of the client to implement the transition,
assess any threats to your independence, and determine a course of action to address these
threats. It is important that the threats and implemented safeguards be appropriately documented
in the working paper file. Also, it will be important to meet with clients, by phone or in person, to
ensure they take responsibility for any changes in measurement and accounting policies on
adoption of ASPE and to determine what assistance needs to be provided by the firm.
Some safeguards that can be implemented are:



Consideration if a second partner review is necessary
Documentation of client’s accounting policy choices on transition to ASPE and
acknowledgement by them of those choices
Approval by the client of any journal entries and financial statement presentation changes
6. Have The Report Templates for Review and Audit Engagements Been Updated
Appropriately?
The wording for review and audit reports can become onerous given the number of considerations
that need to be assessed. Wording of reports will change depending on the following:


Financial Reporting Framework used
o The framework used needs to be specifically identified
o The wording of the opinion paragraph will change based on the framework used
Comparative of Corresponding report
o Comparative basis: each year reported on must be identified and references in the
report need to be pluralized, as more than one year is being reported on
o Corresponding basis: an additional paragraph is necessary which indicates that the
prior year is unaudited (or for review engagements not reviewed). For example, for
6
an audit engagement, the corresponding figures in the current period financial
statements will be presented as unaudited. This would apply even when the
financial statements prepared in accordance with ASPE are not significantly
different from those prepared in accordance with pre-changeover accounting
standards.
The report issued can be very complex and, therefore, attention should be given to ensure that
the wording is correct. The CICA has issued a guide to assist practitioners, Reporting Implications
of New Auditing and Accounting Standards Issue No. 7 — January 2012, which is located at
www.cica.ca/CAS. An example for a review engagement report using corresponding figures is
also included in the guide.
7. Have the Management Representation Letter Templates Been Updated
Appropriately?
Management representation letter templates for the firm will need to be updated to reflect the
change in accounting framework and that the firm has been engaged to either report on the
current year or all years presented. Templates are available in C-PEM as well as in Caseware, for
those firms at using this software. Sample management representation letter templates are also
available at the CA Store. There are also some excerpts of an audit management representation
letter included in First-Time Reporting on Financial Statements—Adopting Accounting Standards
for Private Enterprises (Appendix B and D), which can be found at
www.cica.ca/privateenterprises.
8. Have Your Firm’s Financial Statement Templates Being Updated?
There are some common disclosure changes that should be considered for all financial
statements, and the firm’s financial statement template should be updated for these changes.
Model financial statements for ASPE are available in C-PEM, from various software providers and
at the CA Store. There is also guidance in the CICA publication A Case Study: Financial
Statement Comparisons, which can be found at www.cica.ca/privateenterprises. It should be
noted that this publication does not provide guidance related to the first year transition
requirements. Excerpts of financial statements in the year of transition are also reproduced in the
CICA publication ASPE: A Guide to Understanding Transitional Options and Accounting Policy
Choices, located at the above noted website.
The CICA Handbook – Accounting, Part II includes a compilation of all of the specific ASPE
disclosure requirements. Though it is not an exhaustive list of all disclosures that might be
required for fair presentation, it can be used to identify the disclosures required. Disclosure of
information that is not material to the financial statements is not necessary. You may wish to
develop a disclosure checklist, based on the above, that can be used to ensure compliance with
the new ASPE disclosure requirements.
Some presentation areas that should be addressed include, but are not limited to, the following:

An opening balance sheet as of the first day of the comparative financial statements
should be presented on the balance sheet. If the client has a December 31 year-end and
is adopting ASPE for 2011, the transition date and the date of the opening balance sheet
would be January 1, 2010. [1500]
7

Non-controlling interest is presented as part of equity and its share of earnings is shown
as an equity item in consolidated financial statements. [1602]

Preferred shares issued in a tax planning arrangement are presented at par, stated or
assigned value as part of equity. When redemption is demanded, they are reclassified as
a liability and measured at the redemption amount. Any adjustment shall be recognized
through retained earnings. [3856]

Low interest or no interest loans that have been adjusted, resulting in the carrying value of
the loan being different from the amount due to the lender, should be presented in a
manner that the lender will understand the difference between the two amounts.
Section
1 Current Assets
Liabilities [1510]
Brief Description
and
Current
Entities shall disclose the amount payable at the end of the period in
respect of government remittances (other than income taxes) [1510.15].
Entities shall disclose the carrying amounts of financial assets measured at
amortized cost and financial assets measured at fair value either on the
face of the balance sheet or in the notes. [3856.38]
2 Financial Instruments [3856]
An entity shall disclose the carrying amount of impaired financial assets, by
type of asset, and the amount of any related allowance for impairment.
[3856.42]
(a) For financial liabilities recognized at the balance sheet date, an entity
shall disclose whether: any financial liabilities were in default or in
breach of any term or covenant during the period that would permit a
lender to demand accelerated repayment; and
(b) The default was remedied, or the terms of the liability were
renegotiated, before the financial statements were completed.
[3856.46]
Entities shall disclose the following items of income, expense, gains or
losses either on the face of the statements or in the notes to the financial
statements:
(a)
Net gains or net losses recognized on financial instruments;
(b)
Total interest income;
(c)
Total interest expense on current financial liabilities;
(d)
Interest expense on long-term financial liabilities, separately
identifying amortization of premiums, discounts and financing fees;
and
(e)
The amount of any impairment loss or reversal of a previously
recognized loss. [3856.52]
For each significant risk (credit, currency, interest rate, liquidity, market and
other price risk) arising from financial instruments, an entity shall disclose
the exposures to risk, how they arise and any change in risk exposures
from the previous period.
For each type of risk, an entity shall disclose concentrations of risk.
[3856.53 and.54]
3 Share Capital [3240]
No longer required to disclose authorized share capital
4 Cash Flow Statement [1540]
No longer required to disclose interest/dividends paid or income taxes paid.
8
5 Investments [3051[
An entity shall provide a listing and description of significant investments,
including the names, carrying values and proportion of ownership interests
held in each investment. [3051.31]
6 General Standards of Financial
Statement Presentation [1400]
An enterprise that prepares its financial statements in accordance with
Canadian Accounting Standards for Private Enterprises, shall state this
basis of presentation prominently in the Notes to the Financial Statements
(1400.16).
9. Has Your Firm Addressed Billing Implications on Transition?
The cost of the transition itself must be taken into account when determining the fee to charge the
client. Naturally, the firm will become more knowledgeable and efficient over time, so
consideration should be given to an equitable way for clients to absorb the learning curve. The
firm may decide to write-off some of the costs or try to average the expenses out among all
affected clients, rather than saddling the early transition clients with the bulk of the costs. Clients
will only feel a fee increase is warranted if the benefits are clearly explained as early as possible
in the year-end process.
10. Has Your Firm Determined What Additional Working Paper Support Will be
Necessary to Address the Transition to ASPE?
Whether the engagement is an audit or a review, additional documentation is required in the year
of transition. The planning of the transition, the documentation of the accounting policy decisions
made, the evidence obtained to support the opening balance sheet and the retrospective
application adjustments will be required.
In addition to the documentation required for the current period, the additional work performed on
the opening balances, the transition to ASPE adjustments and the revised disclosures need to be
documented. This documentation could be filed in the current period working papers or in an
entirely separate file.
Audit and review work programs for the transition to ASPE are available in C-PEM, Caseware and
at the CA Store. The CICA Guide First-Time Reporting on Financial Statements — Adopting
Accounting Standards for Private Enterprises (Appendix F) also has some sample audit
procedures.
One area where there may be significant adjustments is the accounting for financial liabilities.
Information regarding the accounting for transaction costs will need to be gathered. ASPE
requires that transaction costs on financial instruments measured at amortized cost be
capitalized, whereas those costs on financial instruments measured at fair value be expensed.
Given that financial liabilities are measured at amortized cost, transaction costs would need to be
capitalized. Since ASPE is applied retrospectively, information regarding the treatment of
transaction costs related to bank debt outstanding at the transition date would need to be
gathered. Where these costs were previously expensed, an adjustment on transition would need
to be made for these costs to be capitalized.
Under ASPE, all financial assets and financial liabilities arising in third party transactions must be
measured at fair value on initial recognition. It should be noted that transactions with
9
management, as defined in Section 3840 (Related Party Transactions), are considered to be
arms-length for financial instrument purposes. In most cases, the fair value should be identical to
the price paid for the financial asset or the amount incurred for financial liabilities. However, in
some situations the fair value may be different from the amount initially incurred; when the
enterprise takes out an interest-free loan, for example. A common method of determining the fair
value of the liability at inception consists of discounting the future cash flows relating to the loan,
using an interest rate based on comparable market data. An appropriate discount rate could be
established by either reference to an interest rate for a debt instrument with similar characteristics
from the same financial institution or reference to the Bank of Canada rate for a bond with a
similar term, adjusted to take into account the entity’s credit risk. The determination of the fair
value of the liability at inception may require management to make several assumptions.
Therefore, it is important to determine whether these assumptions are appropriate.
Once the amount of the discount and transaction costs have been determined, the entity will have
the choice to amortize these amounts over the life of the liability, using either the straight-line
basis or the effective interest rate method. The straight-line method amortizes the discount evenly
over the term, whereas the effective interest method amortizes the discount over the term using a
constant discount rate, resulting in more amortization in the beginning and less at the end of the
term.
Other complex areas that may require additional time and resources include business
combinations, asset retirement obligations and stock-based compensation.
It is important to consider the income tax effect of any adjustments determined on transition. In
most cases, the adjustments will result in temporary differences and will be an adjustment on the
T2(S)1. Where the client’s accounting policy is to account for future income taxes, the future taxes
related to these temporary differences will need to be audited or reviewed. Where the client
accounts for income taxes on the income taxes payable method, the effect of these adjustments
on the tax reconciliation will need to be reviewed or audited.
For some entities, after completing the above steps it may be determined that there are no
adjustments on transition. It will still be important to ensure that there is adequate documentation
to support this conclusion. Also, even though there are no adjustments the report issued on a
corresponding basis would still indicate that the prior year was unaudited for an audit report (not
reviewed for a review engagement report).
The financial statements will still need to be adjusted for the presentation and disclosure
requirements on transition as described in Section 1500 (First-time Adoption). Also, there may be
other disclosures that need to be modified as a result of the transition to a new framework. The
following is an example of the disclosure in the financial statements for the adoption of ASPE,
where there have been no adjustments.
―Effective January 1, 2011, the Company adopted the requirements of the
Canadian Institute of Chartered Accountants (CICA) Handbook – Accounting,
electing to adopt the new accounting framework: Canadian Accounting
Standards for Private Enterprises (ASPE). These are the Company’s first
financial statements prepared in accordance with ASPE, which has been
applied retrospectively. The accounting policies set out in the significant
accounting policies note have been applied in preparing the financial statements
10
for the year ended December 31, 2011, the comparative information for the year
ended December 31, 2010 and in the preparation of the opening ASPE balance
sheet at January 1, 2010 (the Company’s date of transition). The Company
issued financial statements for the year ended December 31, 2010 using
generally accepted accounting principles prescribed by CICA Handbook –
Accounting XFI. The adoption of ASPE had no impact on the previously
reported assets, liabilities and equity of the Company, and accordingly no
adjustments have been recorded in the comparative balance sheet, income
statement, statement of retained earnings and the cash flow statement. Certain
of the Company’s disclosures included in these financial statements reflect the
new disclosure requirements of ASPE.‖
NOTE: This note is an example and not a prescribed requirement or format. Per paragraph
1500.35, required disclosures are the amount of each charge to retained earnings at the date of
transition and the reason therefore, and a reconciliation of the net income reported in an entity's
most recent previously issued statements to its net income under ASPE for the same period. The
disclosure is required to provide sufficient detail (1500.36) to enable users to understand the
retained earnings and income statement changes. In addition, paragraph 1500.37 requires
disclosure of the elective exemptions used.
11