On the initial application of accounting standards for private enterprises ("ASPEs") on January 1, 2011, a corporation revalued its assets (from their book value under “old” Canadian GAAP) to fair value, and increased its retained earnings accordingly. Does "retained earnings" in s. 181.2(3)(a) refer to that concept in Section 3251, Equity, ASPE; and would the revaluation be included? CRA responded:
As ASPE partially replaced former Canadian GAAP, the reference to GAAP in subparagraph 181(3)(b)(i) is considered a reference to ASPE. …
[I]f an entity adopts ASPE, the term retained earnings for the purposes of paragraph 181.2(3)(a) will be defined in accordance with ASPE. …
[T]he adjustment to the retained earnings of the corporation as a result of the revaluation of its assets will be taken into account for the purposes of paragraph 181.2(3)(a) to the extent that the presentation of such adjustment conforms with ASPE.