This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

Journal entry — FASB votes to remove DSE concept from U.S. GAAP and amend the consolidation requirements

Published on: Feb 27, 2014

At today’s meeting, the FASB voted to remove the concept of a development-stage entity (DSE) from U.S. GAAP.1 Specifically, the FASB voted to:

  • Remove ASC 9152 in its entirety from the FASB Accounting Standards Codification.
  • Delete the guidance in ASC 8103 on how to assess whether a DSE has sufficient equity at risk in the evaluation of whether the DSE is a variable interest entity.
  • Clarify that all entities, including entities that have not begun operations, should provide the risk and uncertainty disclosures required in ASC 275.4

The FASB instructed its staff to draft an Accounting Standards Update (ASU) reflecting the Board’s decision. The ASU will be applied retrospectively and will be effective for public business entities in interim and annual periods beginning after December 15, 2014. The requirements will be effective for nonpublic business entities for annual periods beginning after December 15, 2014, and interim and annual periods thereafter. However, both public and nonpublic entities will have additional time to adopt the amendments to ASC 810. All entities will be permitted to early adopt the standard.


1    Under current U.S. GAAP, a DSE is defined as follows:

An entity devoting substantially all of its efforts to establishing a new business and for which either of the following conditions exists:

a. Planned principal operations have not commenced.

b. Planned principal operations have commenced, but there has been no significant revenue therefrom.

2     FASB Accounting Standards Codification Topic 915, Development Stage Entities.

3    FASB Accounting Standards Codification Topic 810, Consolidation.

4    FASB Accounting Standards Codification Topic 275, Risks and Uncertainties.

Accounting Journal Entries Image

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.