ASPE Section 1625
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Comprehensive Revaluation of Assets and Liabilities
Comprehensive Revaluation of Assets and Liabilities is part of the Accounting Standards for Private Enterprises (ASPE).
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Conceptual Framework Linkage
Resetting the accounting basis entirely, in narrow circumstances
ASPE Section 1625 PERMITS an ENTERPRISE, in TWO narrowly DEFINED circumstances, to COMPREHENSIVELY revalue ITS assets and LIABILITIES to FAIR value – ESTABLISHING an ENTIRELY new BASIS of accounting GOING forward. THIS is a GENUINELY distinctive FEATURE within THIS poster LIBRARY'S entire COVERAGE – unmodified IFRS GENERALLY does NOT permit a COMPARABLE "fresh START" revaluation OUTSIDE very NARROW circumstances (Section 7).
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Scope – Two Narrow Triggering Scenarios
Purchase transactions and financial reorganizations, only
ScenarioDescription
Purchase transaction ("push-down accounting")WHERE substantially ALL of an ENTERPRISE'S equity INTERESTS are ACQUIRED by ANOTHER party
Financial reorganization ("fresh start" accounting)WHERE an ENTERPRISE emerges FROM a FORMAL financial REORGANIZATION (SUCH as bankruptcy OR restructuring proceedings) MEETING specific CRITERIA
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Scenario One – Push-Down Accounting Following a Purchase Transaction
Reflecting the acquirer's own cost basis within the acquired entity's own books
WHERE SUBSTANTIALLY ALL of an ENTERPRISE'S equity INTERESTS are ACQUIRED (e.g. a PRIVATE company IS purchased IN full BY another PARTY), THE acquired ENTERPRISE may "PUSH DOWN" the ACQUIRER'S own NEW cost BASIS – REVALUING its OWN assets and LIABILITIES to FAIR value WITHIN its OWN separate financial STATEMENTS, RATHER than CONTINUING to REPORT at ITS historical, PRE-acquisition carrying AMOUNTS.
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Scenario Two – Financial Reorganization ("Fresh Start" Accounting)
A clean accounting slate following formal restructuring
WHERE an ENTERPRISE emerges FROM a FORMAL financial REORGANIZATION (SUCH as PROCEEDINGS under the COMPANIES' Creditors ARRANGEMENT Act or the BANKRUPTCY and INSOLVENCY Act) MEETING specific CRITERIA – TYPICALLY involving a GENUINE change IN control and a SUBSTANTIAL realignment OF the entity'S capital STRUCTURE – it MAY apply COMPREHENSIVE revaluation, ESTABLISHING a "FRESH start" basis of ACCOUNTING that REFLECTS the entity'S post-REORGANIZATION economic REALITY, RATHER than CARRYING FORWARD its pre-REORGANIZATION historical COST basis.
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What Comprehensive Revaluation Actually Does
Every asset and liability restated to fair value at once
COMPREHENSIVE revaluation REQUIRES restating ALL of an ENTERPRISE'S identifiable ASSETS and LIABILITIES to THEIR fair VALUES as OF the REVALUATION date – NOT a SELECTIVE, item-by-ITEM revaluation, but a COMPLETE, entity-WIDE reset OF the accounting BASIS, MUCH as WOULD occur in a FRESH acquisition ACCOUNTING exercise.
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Where the Revaluation Adjustment Is Recognized
Typically within retained earnings or a separate equity component
THE NET adjustment ARISING from the COMPREHENSIVE revaluation is TYPICALLY recognized WITHIN retained EARNINGS (or a SEPARATE component OF equity, DEPENDING on the SPECIFIC circumstances) – ESTABLISHING the NEW, revalued AMOUNTS as the ENTITY'S fresh COST basis GOING forward, RATHER than FLOWING through NET income for the PERIOD.
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Why This Is a Genuinely Distinctive Feature
A rare instance where ASPE goes beyond what IFRS permits
UNMODIFIED IFRS GENERALLY does NOT permit PUSH-down accounting OR a COMPARABLE comprehensive "FRESH start" revaluation OUTSIDE of VERY narrow CIRCUMSTANCES – WHILE US GAAP HAS historically PERMITTED a COMPARABLE push-DOWN accounting option UNDER ASC 805-50, WITHIN certain CONDITIONS. ASPE'S own EXPLICIT, dedicated STANDALONE Section for BOTH the push-DOWN and FRESH-start SCENARIOS represents a GENUINELY notable POINT where CANADIAN private-ENTERPRISE GAAP DIVERGES meaningfully FROM the more RESTRICTIVE international IFRS APPROACH, REFLECTING the PARTICULAR relevance OF push-down ACCOUNTING and FRESH-start reporting TO Canadian private-COMPANY acquisition and RESTRUCTURING practice.
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Conditions That Must Be Met
Not an unrestricted, elective option
COMPREHENSIVE revaluation is NOT a FREELY elective POLICY choice – it APPLIES ONLY where the SPECIFIC conditions FOR one of the TWO qualifying SCENARIOS (Sections 3-4) are GENUINELY met, ENSURING the OPTION is reserved FOR situations INVOLVING a GENUINE, substantive CHANGE in the ENTERPRISE'S ownership OR capital structure, RATHER than being AVAILABLE for ROUTINE, discretionary REVALUATION.
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Worked Example – Push-Down Accounting After an Acquisition
Reflecting the new owner's cost basis within the acquired company itself
Example: A private company acquired in full
An acquirer purchases 100% of a private target company for $12,000,000. At acquisition, the target's identifiable net assets have a fair value of $10,500,000, previously carried at a historical cost basis of $7,200,000 within the target's own books.
The TARGET applies COMPREHENSIVE revaluation, RESTATING its OWN assets and LIABILITIES to THEIR $10,500,000 FAIR value – RECOGNIZING a $10,500,000 − $7,200,000 = $3,300,000 revaluation ADJUSTMENT, TYPICALLY within RETAINED earnings, ESTABLISHING this NEW basis as the TARGET'S own FRESH accounting STARTING point.
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Worked Example – Fresh Start Accounting After a Financial Reorganization
A clean slate after formal restructuring proceedings
Example: Emerging from CCAA proceedings
A private company emerges from formal financial reorganization proceedings, meeting the specific criteria for comprehensive revaluation, with a substantial realignment of its capital structure and a genuine change in control.
The COMPANY applies COMPREHENSIVE revaluation, RESTATING all IDENTIFIABLE assets and LIABILITIES to FAIR value AS of the REORGANIZATION date – ESTABLISHING a "FRESH start" accounting BASIS that REFLECTS its POST-reorganization economic REALITY, RATHER than CARRYING forward its PRE-reorganization historical COST figures.
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Disclosure Requirements
What Section 1625 requires
Description of the event triggering comprehensive revaluation, and confirmation the qualifying conditions were metBasis and amount of revaluation adjustments recognizedWhere the revaluation adjustment was recognized within the financial statements
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Critical Judgments & Estimates
Where judgment matters most
SIGNIFICANT JUDGMENTS
Whether the specific conditions for push-down or fresh-start accounting are genuinely met
SIGNIFICANT ESTIMATES
Fair value of all identifiable assets and liabilities as of the revaluation date
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Relationship to IFRS and US GAAP Push-Down Accounting
Comparison – ASPE Section 1625 vs IFRS vs US GAAP
FeatureASPE Section 1625Unmodified IFRS
Push-down accountingPermitted, dedicated SectionGENERALLY not permitted
Fresh-start reorganization accountingPermitted, dedicated SectionNarrow, indirect equivalents only
ASPE'S EXPLICIT accommodation OF both SCENARIOS is MORE closely ALIGNED with US GAAP'S OWN historical push-DOWN accounting OPTION (ASC 805-50) THAN with IFRS'S more RESTRICTIVE stance – a GENUINE illustration of ASPE'S own ROOTS in North-AMERICAN accounting TRADITION.
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Statement Mapping
Where every comprehensive revaluation event lands
EventStatement(s) affectedNotes
Comprehensive revaluation adjustmentBS SRETypically recognized within retained earnings, not net income
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Related Standards
Cross-reference map
SectionConnection
Section 1582Business Combinations – supplies the fair value measurement principles this Section's revaluation exercise applies
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Quick-Reference Glossary
Push-down accounting
Reflecting an acquirer's new cost basis directly within the acquired entity's own separate financial statements, following a purchase of substantially all of its equity interests.
Fresh start accounting
A comprehensive revaluation of assets and liabilities to fair value upon emergence from a qualifying formal financial reorganization.
Financial statement key (ASPE terminology)
BS Balance Sheet
IS Income Statement
SRE Statement of Retained Earnings / Statement of Changes in Equity
SCF Cash Flow Statement