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Accounting for Subsidiaries under the Cost Method and the Equity Method - AcSB

Date recorded:

At its meeting on May 18, 2016, the AcSB approved the issuance of these amendments to Sections 1591 3051, Investments, subject to final drafting and a written ballot.  This approval occurred after reviewing feedback from its Private Enterprise Advisory Committee.

The AcSB decided not to add a requirement to Section 3051 to expense acquisition-related costs for investments subject to significant influence when the equity method is applied because this change is beyond the scope of the current project.  The AcSB will consider whether to propose this change at a future meeting.

The AcSB decided to: (i) further clarify the scope out of common control transactions; (ii) amend Section 1591 to clarify the requirements when there is contingent consideration outstanding or the initial accounting for the subsidiary is incomplete; (iii) amend Section 1500, First-time Adoption, to clarify that the amendments apply from the date of transition; and (iv) amend Sections 1506, Accounting Changes, and 1582, Business Combinations, to prohibit prospective application of the consequential amendments to these Sections.

The AcSB also agreed that, other than drafting improvements, no other changes to the Exposure Draft proposals are required as a result of the feedback received from stakeholders.

The AcSB expects to issue the amendments to Sections 1591 and 3051 in the fourth quarter of 2016.  The amendments will be effective for fiscal years beginning on or after January 1, 2018, with earlier application permitted.

Review the Executive Summary on the AcSB's Web site.

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