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FASB issues standard update amending consolidation guidance

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In our New Developments Summary, Grant Thornton reviews a new FASB issuance, ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities, which amends the consolidation guidance by providing private companies an accounting policy election to not apply variable interest entity (VIE) guidance when assessing whether a legal entity should be consolidated.

The guidance in ASU 2018-17 allows a private company to not evaluate a legal entity for consolidation under the VIE guidance if all of the following criteria are met:
  • Reporting entity and the legal entity are under common control
  • Reporting entity and the legal entity are not under common control of a public business entity
  • Legal entity is not a public business entity
  • Reporting entity does not directly or indirectly own a majority of the legal entity's voting interest

These amendments are effective for a private company for fiscal years beginning after Dec. 15, 2020, and interim periods within fiscal years beginning after Dec. 15, 2021. For entities other than private companies these amendments are effective for fiscal years and interim periods within those fiscal years beginning after Dec. 15, 2019.

Download our New Developments Summary for a complete guide to this new publication.


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Rahul Gupta
Partner - Accounting Principles Group
T +1 312 602 8084