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Deloitte comments on FASB's proposed ASU on interests held through related parties that are under common control

Published on: Jul 26, 2016

Deloitte & Touche LLP comments on the FASB's proposed ASU Interests Held Through Related Parties That Are Under Common Control, which was issued in June 2016.

An excerpt from the comment letter is shown below:

We support the FASB’s proposal to amend the guidance on evaluating interests held through related parties that are under common control in the consolidation assessment for variable interest entities (VIEs). We agree that requiring a single decision maker to attribute indirect interests held through its related parties under common control entirely to itself may overstate the single decision maker’s economic exposure and result in the consolidation of a legal entity (or legal entities), which may be an outcome that is not decision-useful information to investors. Thus, we support the Board’s proposal to eliminate the requirement that when performing the primary-beneficiary assessment, a single decision maker consider indirect interests held through related parties under common control in a manner equivalent to its consideration of direct interests.

Although we support the proposed ASU, the Board may want to consider clarifying some aspects of the applicability of ASC 810-10-25-42 to parent/subsidiary relationships and the scope of the related-party guidance in ASC 810-10-25-44A.

Full text of the comment letter is available below.

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