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Chartered Accountants of Canada Emerging Issues Committee/Comité sur les problèmes nouveaux

Emerging Issues Committee
Decision Summary
November 2, 2009

This summary of Emerging Issues Committee (EIC) decisions has been prepared for information purposes only. Decisions reported reflect only the current status of discussion on projects, which may change after further deliberations. Decisions to publish Abstracts, amendments thereto or Draft Abstracts are final only after a formal ballot process.
 
For more detailed information on EIC projects, please contact the EIC Secretary.

 

Draft Abstract Approved

Multiple Deliverable Revenue Arrangements

The Committee noted that EIC 142, “Revenue Arrangements with Multiple Deliverables,” is converged with the FASB Accounting Standards Codification Subtopic 605-25 (formerly EITF Issue No. 00-21, “Revenue Arrangements with Multiple Deliverables“).  In September 2009, the FASB issued amendments to Subtopic 605-25 to address certain difficulties in applying the Subtopic.  These amendments require a vendor to allocate arrangement consideration at the inception of an arrangement to all deliverables using the relative selling price method.  It also changes the level of evidence of the standalone selling price required to separate deliverables when more objective evidence of the selling price is not available.  Given the requirement to use the relative selling price method of allocating arrangement consideration, it prohibits the use of the residual method.    

The Committee approved a Draft Abstract consistent with the changes to Subtopic 605-25.  Entities will be permitted to continue to use the guidance in existing EIC-142 until adoption of IFRSs or accounting standards for private enterprises.  Entities electing to adopt the amendments to EIC-142 may do so prospectively for revenue arrangements with multiple deliverables entered into or materially modified in fiscal years beginning on or after either January 1, 2009 or January 1, 2010. The amendments may also be applied retrospectively.  It is expected that D80 will be posted on the CICA website for public comment by November 19, 2009.

Abstract Amended

Amendment to EIC-173

The Basis of Application of EIC-173, “Credit Risk and the Fair Value of Financial Assets and Financial Liabilities,” allows entities that do not apply Section 3855, Financial Instruments — Recognition and Measurement, to defer the application of EIC-173 to fiscal years beginning on or after January 1, 2010.  The Committee noted that the AcSB has recently finalized the accounting standards for private enterprises and that these have an effective date of years beginning on or after January 1, 2011.

The Committee approved an amendment to the basis of application of EIC-173 so that entities that do not apply Section 3855 need not adopt EIC-173.  It is expected that the amendment to EIC-173 will be posted on the CICA website by November 9, 2009.