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Journal entry — Principal versus agent — FASB discusses redeliberation plan for proposed ASU

Published on: Sep 11, 2013

The FASB met today to discuss its plan to redeliberate its proposed Accounting Standards Update (ASU) Principal Versus Agent Analysis. Issued in November 2011, the proposed ASU provides guidance on identifying when an entity with an interest in another entity is acting as a principal (and therefore may be required to consolidate the other entity) or as an agent of another party (and therefore may not be required to consolidate the other entity).

The meeting handout notes that on the basis of feedback received on the proposed ASU, the Board will redeliberate the following issues over the next several months:

  • “The overall principle in the principal versus agent analysis.”
  • “The factors that the decision maker must consider, and the weighting of each factor.”
  • “Participating rights and redemption rights.”
  • “Decision maker’s exposure to negative and positive returns.”
  • “Consolidation conclusions for money market funds.”
  • “Related party issues and the proposed requirement that the decision maker must consider any indirect interests held through related parties.”
  • “Effective date and transition requirements.”

At the meeting, the Board also indicated that it aims to issue a final ASU in the second half of 2014.

For additional information about the project’s history and Board decisions reached to date, see the FASB’s project page.

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