Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
APFF - 1995
Question 8
Part I.3 taxes
Since its incorporation, a corporation has always used the historical cost accounting method. On June 30, there was a change in control and it was decided that that date would henceforth be used as its fiscal year-end. Unaudited financial statements in which the historical cost method is to be used will be prepared as of June 30 and presented to the shareholders.
The parent corporation’s tax year ends on December 31. Audited financial statements for the subsidiary are prepared as of that date using push-down accounting, which increases the value of the assets and creates surpluses.
The historical cost method and push-down accounting are accepted under GAAP.
Would Revenue Canada accept financial statements prepared using the historical cost method to compute the large corporation tax?
Answer by the Department of Revenue
The Department feels that the amounts shown on the balance sheet presented to the shareholders and prepared using the historical cost method must be considered for large corporation income tax purposes.