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FASB improves consolidation guidance

  • FASB document Image

Oct 31, 2018

The FASB has issued Accounting Standards Update (ASU) No. 2018-17, “Targeted Improvements to Related Party Guidance for Variable Interest Entities,” to reduce the cost and complexity of financial reporting associated with consolidation of variable interest entities.

Specif­i­cally, under the ASU:

  • Private com­pa­nies may “elect not to apply VIE guidance to legal entities under common control (including common control leasing arrangements) if both the parent and the legal entity being evaluated for consolidation are not public business entities.”
  • “Indirect interests held through related parties in common control arrangements should be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests.”

For more in­for­ma­tion, see the press release, FASB in Focus newslet­ter, and ASU on the FASB’s Web site.

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