FASB Proposes Reorganizing Consolidation Guidance
To address concerns over the organization of the guidance under Topic 810, Consolidation, the Financial Accounting Standards Board (“FASB”) recently issued Proposed Accounting Standards Update, Consolidation (Topic 812): Reorganization. The proposal reorganizes certain components within the FASB’s consolidation guidance and includes for illustrative purposes the amendments under the Proposed Accounting Standards Update, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities.
The FASB would reorganize the consolidation guidance under Topic 810 into a new Topic featuring the following two Subtopics for variable interest entities and voting interest entities:
- Subtopic 812-20, Consolidation—Variable Interest Entities
- Subtopic 812-30, Consolidation—Voting Interest Entities
In addition, the FASB proposes moving the guidance for “Consolidation of Entities Controlled by Contract” listed under Topic 810 to Topic 958, Not-for-Profit Entities, since that guidance only applies to nonprofits. Other proposed changes include superseding the guidance under Subtopic 810-30 for research and development agreements, and clarifying certain components of the consolidation guidance to make it easier for users to understand without changing analyses performed or the outcomes currently reached by stakeholders.
Comments on the consolidation proposal are due Monday, December 4.