FASB Proposes Amendments to Consolidation Guidance
The Financial Accounting Standards Board (“FASB”) has issued a proposal that would impact businesses that evaluate whether they must consolidate a variable interest entity (“VIE”) when parties under common control are involved. Under the proposed Accounting Standards Update, Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control, the amendments would require having a single decision maker handle the economics it is subjected to when establishing whether it is the primary beneficiary of a VIE prior to potentially reviewing which party is closely related to the VIE. Separately, the proposed amendments would not have an effect on the FASB’s definition of a primary beneficiary.
Comments on the proposed amendments to the consolidation guidance are due Monday, July 25. More on the proposal can be read at the Journal of Accountancy website.