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Journal entry — Pushdown accounting — FASB issues ASU; SEC rescinds SAB topic

Published on: Nov 18, 2014

Today, the FASB issued ASU 2014-17,1 which gives an acquired entity2 the option of applying pushdown accounting in its stand-alone financial statements upon a change-in-control event. The guidance is effective immediately.3 ASU 2014-17 codifies the final consensus reached by the EITF on Issue 12-F4 at its September 2014 meeting.5

Also, in connection with the FASB’s issuance of ASU 2014-17, the SEC today rescinded SAB Topic 5.J,6 which historically has contained the SEC staff’s views on the application of pushdown accounting for SEC registrants. As a result of the SEC’s actions, all entities — regardless of whether they are SEC registrants — will now apply ASU 2014-17 for guidance on the use of pushdown accounting.

Editor’s Note: For SEC registrants, the issuance of ASU 2014-17 and the rescission of SAB Topic 5.J represent a significant change to the guidance on pushdown accounting. Specifically, under ASU 2014-17, the application of pushdown accounting is no longer required by SEC registrants in certain circumstances. Rather, an acquired entity will now always have the ability to choose whether to apply pushdown accounting upon a change-in-control event.

For more information, see the FASB's ASU and the press release on the SEC's Web site.


1 FASB Accounting Standards Update No. 2014-17, Pushdown Accounting — a consensus of the FASB Emerging Issues Task Force.

2 The scope of the final consensus will include both public and nonpublic acquired entities, whether a business or a nonprofit activity.

3 The ASU states, "After the effective date, an acquired entity can make an election to apply the guidance to future change-in-control events or to its most recent change-in-control event. However, if the financial statements for the period in which the most recent change-in-control event occurred already have been issued or made available to be issued, the application of this guidance would be a change in accounting principle." Pushdown accounting applied by an acquiree before the effective date of the guidance is irrevocable.

4 EITF Issue No. 12-F, “Pushdown Accounting.”

5 For more information about EITF Issue 12-F, see Deloitte’s September 2014 EITF Snapshot.

6 SEC Staff Accounting Bulletin Topic 5.J, “New Basis of Accounting Required in Certain Circumstances.”

Pushdown accounting — FASB issues ASU; SEC rescinds SAB topic Image

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