FASB proposes reorganizing consolidation guidance

By Ken Tysiac

FASB issued a proposal Wednesday that would reorganize and clarify the consolidation guidance in FASB Accounting Standards Codification Topic 810.

Stakeholders told the board that the consolidation guidance is difficult to understand and navigate. Proposed Accounting Standards Update, Consolidation (Topic 812): Reorganization, is an attempt to address those concerns.

The proposal would:

  • Move the consolidation guidance that is currently in Topic 810 to a new Topic 812.
  • Create separate subtopics for variable-interest entities (Subtopic 812-20) and voting-interest entities (Subtopic 812-30).
  • Move the guidance for “Consolidation of Entities Controlled by Contract” that is currently in Topic 810 to Topic 958, Not-for-Profit Entities, because that guidance applies only to not-for-profits.
  • Supersede the guidance currently in Subtopic 810-30 for research and development arrangements.
  • Clarify certain areas of the guidance to make it easier to understand.

For illustrative purposes only, the amendments contained in Wednesday’s proposal include amendments proposed earlier in Proposed Accounting Standards Update, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities. That proposal has been exposed for public comment separately.

Comments on Wednesday’s proposal can be submitted by Dec. 4 at FASB’s website.

Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is a JofA editorial director.

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