FASB amends guidance for consolidating VIEs

By Ken Tysiac

A new financial reporting standard issued by FASB on Wednesday amends rules for consolidating variable-interest entities (VIEs).

The guidance is contained in Accounting Standards Update No. 2016-17, Consolidation (Topic 810): Interests Held Through Related Parties That Are Under Common Control.

In situations involving common control, the amendments will require a single decision-maker to 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.

FASB also is considering whether other changes to the consolidation guidance for common-control arrangements are necessary.

The standard takes effect for public business entities for fiscal years beginning after Dec. 15, 2016, including interim periods within those fiscal years. For all other entities, the amendments take effect for fiscal years beginning after Dec. 15, 2016, and interim periods within fiscal years beginning after Dec. 15, 2017.

Early adoption is permitted, including adoption in an interim period. If an entity adopts the amendments in an interim period, any adjustments are required to be reflected as of the beginning of the fiscal year that includes that interim period.

Ken Tysiac (ktysiac@aicpa.org) is a JofA editorial director.

SPONSORED REPORT

Solving the lease accounting challenge

The challenges of the new lease accounting standard have been pervasive to say the least. In this free, independently-written report, you'll learn effective adoption strategies as well as resources for easing the transition to the new standard.

FEATURE

Tackling TCJA changes this tax season

Return preparers must be ready for how the Tax Cuts and Jobs Act has modified many common features of individual and business returns.