Defining Issues 
| October 2018

FASB expands the private company VIE exemption and changes fee guidance for decision makers

Filed under: Consolidation

KPMG reports on ASU 2018-17. The ASU provides a new private company variable interest entity exemption and changes how decision makers apply the variable interest criteria.


ASU 2018-17

All entities that are required to determine whether they should consolidate a legal entity under the variable interest entity (VIE) guidance, including private companies that have elected the common control leasing alternative.

Relevant dates


Other Entities

Private companies

Annual periods in fiscal years beginning after

December 15, 2019

December 15, 2020

Interim periods in fiscal years beginning after

December 15, 2019

December 15, 2021

Early adoption allowed?

Yes, including adoption in an interim period


Key impacts

  • ASU 2018-17 provides private company reporting entities an accounting policy election not to apply the VIE guidance to interests in other private legal entities under common control as long as:
    • the common control parent is a private company; and
    • the private reporting entity does not have a controlling financial interest under the voting interest entity consolidation guidance. 
  • The new guidance supersedes the current private company VIE exemption beyond common control leasing arrangements
  • The ASU aligns the evaluation of whether a decision maker's fee is a variable interest with the guidance in the primary beneficiary test by requiring the decision maker to consider an indirect interest in a VIE held by related party under common control on a proportionate basis



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