A new FASB proposal would amend consolidation guidance for single decision-makers.
Current GAAP requires a single decision-maker, in circumstances involving common control, to attribute interests held by certain of its related parties to itself. This may require the single decision-maker to consolidate a variable-interest entity (VIE) even if it has little or no direct economic interests in it.
Under the proposal, a single decision-maker would focus on the economics to which it is exposed when determining whether it is the primary beneficiary of a VIE before potentially evaluating which party is most closely associated with the VIE.
Comments for the proposal closed on July 25. The change is meant to provide more useful information to investors.