2 May 2017 External T.I. 2016-0663781E5 F - Meaning of retained earnings/calculation of capital -- summary under Paragraph 181.2(3)(a)

On the initial application to it 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. After stating that “as ASPE partially replaced former Canadian GAAP, the reference to GAAP in subparagraph 181(3)(b)(i) is considered a reference to ASPE,” CRA found that since this increase accorded with ASPEs, such increase also increased the corporation’s capital under s. 181.2(3)(a).