FASB reverses decision on accounting for interests in other investment companies
At its meeting yesterday, the United States Financial Accounting Standards Board (FASB) reversed its position on a joint decision made recently with the IASB on the measurement requirements for an investment company’s interest in another investment company.
The FASB decided that rather than requiring an investment company to account for its interest in another investment company at fair value, it would not provide guidance on the measurement of such interests and would instead allow investment companies to continue current industry practice. Although this decision diverges from its recent joint decision with the IASB, the Board highlighted that (1) users are not opposed to current industry practice and (2) its project on applying asset- or entity-based guidance to nonfinancial assets held in an entity may provide additional insight on how to address this issue. The FASB's decision is documented in the corresponding Action Alert (link to FASB website).