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FASB issues two proposals in response to EITF consensuses-for-exposure

  • FASB (US Financial Accounting Standards Board) Image

Oct 30, 2014

The FASB has issued the following two proposed ASUs in response to consensuses-for-exposure reached at the EITF’s September 19, 2014, meeting: (1) “Effects on Historical Earnings per Unit of Master Limited Partnership Dropdown Transactions” and (2) “Disclosure for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent).” Comments on both proposals are due by January 15, 2015.

 

Effects on Historical Earnings per Unit of Master Limited Partnership Dropdown Transactions

This proposal was issued in response to the EITF’s consensus-for-exposure on Issue 14-A1 that, upon the occurrence of a dropdown transaction occurring after initial formation of a master limited partnership (MLP) and accounted for as a reorganization of entities under common control, an MLP would allocate “the net income (loss) of the transferred business prior to the date of the dropdown transaction entirely to the [general partner] as if only the [general partner] had rights to that net income (loss).” As a result, there would be no adjustment to historical earning per unit reported for limited partner units.

For more information, see the proposed ASU on the FASB’s Web site.

 

Disclosure for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)

This proposal was issued in response to the EITF’s consensus-for exposure on Issue 14-B2 that entities would no longer categorize within the levels of the fair value hierarchy table all investments that a reporting entity has measured under the NAV practical expedient. Instead of categorizing these investments within the levels of the fair value hierarchy table, reporting entities would be required to include those investments measured at NAV under the practical expedient in a reconciling line item in arriving at the amounts measured at fair value in the balance sheet.

For more information, see the proposed ASU on the FASB’s Web site.

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1 EITF Issue No. 14-A, “Effects on Historical Earnings per Unit of Master Limited Partnership Dropdown Transactions.”

2 EITF Issue No. 14-B, “Fair Value Hierarchy Levels for Certain Investments Measured at Net Asset Value.”

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