KPMG reports on proposed ASU to reorganize ASC 810 into new ASC 812. FASB proposes to reorganize the consolidation guidance into separate sections for voting interest entities and variable interest entities.
A reporting entity that is required to determine whether it should consolidate a legal entity unless a scope exception applies
September 20, 2017 – FASB issued proposed ASU
December 4, 2017 – Comments due on proposed ASU
Proposed ASU would:
Replace ASC 810 in its entirety and would have separate Subtopics ASC 812-20 for variable interest entities, and ASC 812-30 for voting interest entities. Each subtopic would be complete with its own scope through disclosure sections.
Provide further guidance about how to apply the concept of ‘expected’ as it relates to the definitions of variable interests, expected losses and expected residual returns.
Clarify existing language about when an implicit variable interest exists.
Move rarely used guidance about consolidation of entities controlled by contract from ASC 810, Consolidation, to ASC 958, Not-for-Profit Entities.
Remove the guidance about research and development entities.
The FASB will set the effective date when it considers the feedback on the proposal.
An entity that has not yet adopted the amendments in ASU 2015-02, Consolidation (ASC 810): Amendments to the Consolidation Analysis, would apply those amendments when adopting this proposal.
An entity that already has adopted the amendments in ASU 2015-02 would apply this proposal retrospectively to all relevant prior periods beginning with the fiscal year in which the amendments in ASU 2015-02 initially were applied.
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