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Rescinded [2012-12-21] - Accounting Standard 3.3 - Treasury Board - Prepayments

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This section should be read in conjunction with PSAB 3410, CICA 3040, 3070 and 3450.


1. Prepayments include:

  1. prepaid expenses;
  2. deferred charges;
  3. transfer payments paid in advance as defined by the Policy on Transfer Payments; and
  4. payments where, pursuant to a contract, a payment is made before the completion of the work, delivery of the goods or rendering of the service.

2. For accrual accounting purposes:

  1. A prepaid expense occurs where payment has been made, or a liability incurred, for goods or services to be received in future fiscal years;
  2. A deferred charge occurs where payment has been made, or a liability incurred, for services already received. These services may reasonably be expected to produce benefits in terms of increased revenues or decreased expenses in future fiscal years.


3. Development costs will not be recorded as a deferred charge, but will be expensed in the period in which they are incurred. Costs related to in-house developed software will be accounted for in accordance with the provisions of Treasury Board Accounting Standardá3.1.1 and not as a component of research and development costs.

4. Amortization of any prepaid expense or deferred charge will be charged as an expense on a systematic and rationalábasis.

5. The balance of any prepaid expense or deferred charge shall be written off to expense in the period in which it is determined that there are no future benefits remaining.

6. Prepayments of transfers will be charged to expense when the recipient has met all required criteria including eligible costs. Should it be determined that the recipient is no longer eligible for the transfer payment or eligible costs will not be incurred, prepayments will be recorded as a receivable.

Statement Presentation and Disclosure

7. Prepayments will be reflected on the Statement of Financial Position as non-financial assets. Major items should be shown separately or disclosed in the notes and schedules to the financial statements.