Handbooks | March 2021

 

Insight

Handbook: Equity method of accounting

Latest edition: We explain the equity method of accounting in detail, providing examples and analysis.

Angie Storm

Angie Storm

Partner, Dept. of Professional Practice, KPMG US

+1 212-909-5488

Matt Drucker

Matt Drucker

Partner, Audit, KPMG US

+1 212-872-3584


KPMG provides detailed guidance on and interpretation of ASC 323, providing examples and analysis.

Applicability

  • All companies with equity method investments

Relevant dates

  • Effective immediately

 Key impacts

This March 2021 edition incorporates updated guidance on:

  • Significant influence with less than 20% stock ownership
  • Accounting for tax credits by a tax equity investor
  • Accounting for decreases in capital accounts when tax credits are distributed using the hypothetical liquidation at book value (HLBV) method

Report contents

  • Scope
  • Initial recognition and measurement
  • Recognizing investee activity
  • Recognizing investor-level adjustments
  • Changes in ownership and degree of influence
  • Presentation and disclosure

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