Defining Issues | October 2016
FASB makes targeted change to VIE primary beneficiary test
KPMG reports FASB changes on VIE primary beneficiary. ASU changes VIE analysis of indirect interests held through related parties under common control. Now on a proportionate basis.
Applicability
- Company applying ASC Topic 810, as amended by ASU 2015-02
- In applying the consolidation standard to variable interest entities, analyzing indirect interests held through related parties under common control for the purpose of determining whether a decision maker or service provider is the primary beneficiary
Relevant dates
Mandatory effective dates and early adoption provisions:
Effective date: |
Public business entities |
All other entities |
Annual periods – Fiscal years beginning after |
Dec. 15, 2016 |
Dec. 15, 2016 |
Interim periods – In fiscal years beginning after |
Dec. 15, 2016 |
Dec. 15, 2017 |
Early adoption allowed? |
Yes, immediately |
|
Key impacts
- Amendments to FASB ASC Topic 810
- ASU 2016-17 makes it less likely that a single decision maker will individually meet the characteristics to be the primary beneficiary of the VIE
- However, ASU 2016-17 makes it more likely that a related party tiebreaker test will be required. The tiebreaker test is required when the single decision maker and its related parties under common control collectively meet the characteristics to be the VIE’s primary beneficiary
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Report contents
- Summary of differences between current US GAAP and ASU 2016-17
- Example showing the effect of the amendments
- Effective date