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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. Read More.

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Recap of Private Company Council’s July 11 Meeting

Private Company Council (“PCC”) and Financial Accounting Standards Board (“FASB”) members met Tuesday to discuss stakeholder feedback from the June 13 private company town hall meeting. In addition, the PCC offered input on the following FASB projects: Consolidation Targeted Improvements to Related Party Guidance for Variable Interest Entities Liabilities and Equity—Targeted Improvements Cloud Computing (EITF Issue No. 17-A) Nonemployee Share-Based Payment Accounting Improvements Invitation to Comment on Agenda Consultation Balance Sheet Classification of Debt Updates on these FASB projects and a full meeting recap are available on the PCC website.

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FASB Proposes Simplified Standard for Consolidated Reporting

A proposal to streamline guidance for voting interest entities and variable interest entities is coming this summer. At their June 21 meeting, Financial Accounting Standards Board (“FASB”) members unanimously approved the proposal that would put the aforementioned guidance in Topic 810, Consolidation, in a separate accounting standard. Designated as Topic 812, the new accounting standard would eliminate Topic 810 and organize voting interest entities and variable interest entities into subtopics. The reorganization assumes that once a company decides to follow the voting interest entities or variable interest entities accounting guidance, the company could go directly to the needed category. The. Read More.

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Consolidation Amendments Proposed to Help Private Companies

Giving private companies an easier way to apply its guidance for consolidation reporting, the Financial Accounting Standards Board (“FASB”) has issued Proposed Accounting Standards Update No. 2017-240, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities. The proposed changes to Accounting Standards Codification 810, Consolidation, exempts private companies from using guidance on variable interest entities for certain common control lease arrangements and related legal structures. Instead, private companies must use an accounting policy alternative for other businesses under common control that follow the same criteria. Only some common control arrangements, however, would qualify for the alternative. The. Read More.

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Private Companies Could Be Exempt From Guidance in Consolidation Standard

The Financial Accounting Standards Board (“FASB”) has agreed to issue a proposal exempting private companies under common control from the variable interest entity (“VIE”) guidance in Topic 810, Consolidation. Announced last week, the proposal is part of the board’s efforts to simplify the guidance under Topic 810, which helps companies decide when they must consolidate, or disclose on balance sheets, their holdings in other entities. Changes to be proposed include requiring private companies to provide thorough disclosures that explain their involvement with, and exposure to, the affiliate. Along with private companies’ exemption from the VIE model, the FASB is expected. Read More.

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Highlights from the Private Company Council’s Tuesday Meeting

The following is a recap of Financial Accounting Standards Board (“FASB”) projects discussed at Tuesday’s Private Company Council (“PCC”) meeting: Disclosure Framework. Numerous PCC members expressed support for the project, particularly the inventory exposure draft. The PCC also provided feedback on various portions of the project. Financial instruments—Hedge Accounting. Many PCC members favor the standard, including guidance to give private companies additional time to disclose hedge effectiveness. Liabilities and Equity—Targeted Improvements. Feedback received on the Exposure Draft was discussed, as well as the FASB’s research on an alternative to help streamline financial instruments accounting with “down round” features. The FASB was encouraged. Read More.

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