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GASB clarifies guidance on majority equity interests

  • GASB document Image

Sep 04, 2018

The GASB has issued Statement No. 90, “Majority Equity Interests.”

State­ment 90 states that “a majority equity interest in a legally separate organization should be reported as an investment if a government’s holding of the equity interest meets the definition of an investment.” However, for holdings that do not meet the definition of an investment, “a government should report the legally separate organization as a component unit, and the government or fund that holds the equity interest should report an asset related to the majority equity interest using the equity method.”

In addition, Statement 90 requires that “a component unit in which a government has a 100 percent equity interest account for its assets, deferred outflows of resources, liabilities, and deferred inflows of resources at acquisition value at the date the government acquired a 100 percent equity interest in the component unit.”

State­ment 90 is ef­fec­tive for re­port­ing periods be­gin­ning after De­cem­ber 15, 2018. Early ap­pli­ca­tion is en­cour­aged.

For more in­for­ma­tion, see the press release and State­ment 90 on the GASB’s Web site.

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