Changes to the Requirement for Consolidating VIEs
[vc_row type=”full_width_background” full_screen_row_position=”middle” bg_color=”#bbdd94″ scene_position=”center” video_bg=”use_video” text_color=”light” text_align=”left” top_padding=”5%” bottom_padding=”5%” overlay_strength=”0.3″ shape_divider_position=”bottom” bg_image_animation=”none” shape_type=””][vc_column centered_text=”true” column_padding=”no-extra-padding” column_padding_position=”all” background_color_opacity=”1″ background_hover_color_opacity=”1″ column_link_target=”_self” column_shadow=”none” column_border_radius=”none” width=”1/1″ tablet_width_inherit=”default” tablet_text_alignment=”default” phone_text_alignment=”default” column_border_width=”none” column_border_style=”solid” bg_image_animation=”none” enable_animation=”true” animation=”none”][/vc_column][/vc_row][vc_row type=”in_container” full_screen_row_position=”middle” bg_color=”#ffffff” scene_position=”center” text_color=”dark” text_align=”left” overlay_strength=”0.3″ shape_divider_position=”bottom” bg_image_animation=”none”][vc_column centered_text=”true” column_padding=”padding-7-percent” column_padding_position=”all” background_color=”#ffffff” background_color_opacity=”1″ background_hover_color_opacity=”1″ column_link_target=”_self” column_shadow=”none” column_border_radius=”none” top_margin=”-6%” width=”1/1″ tablet_width_inherit=”default” tablet_text_alignment=”default” phone_text_alignment=”default” column_border_width=”none” column_border_style=”solid” bg_image_animation=”none”][vc_column_text]
November 1, 2018
[/vc_column_text][divider line_type=”Small Line” line_alignment=”default” line_thickness=”2″ divider_color=”accent-color” animate=”yes” custom_height=”50″ custom_line_width=”80″][/vc_column][/vc_row][vc_row type=”in_container” full_screen_row_position=”middle” bg_color=”#ffffff” scene_position=”center” text_color=”dark” text_align=”left” overlay_strength=”0.3″ shape_divider_position=”bottom” bg_image_animation=”none”][vc_column centered_text=”true” column_padding=”padding-7-percent” column_padding_position=”all” background_color=”#ffffff” background_color_opacity=”1″ background_hover_color_opacity=”1″ column_link_target=”_self” column_shadow=”none” column_border_radius=”none” top_margin=”-6%” width=”1/1″ tablet_width_inherit=”default” tablet_text_alignment=”default” phone_text_alignment=”default” column_border_width=”none” column_border_style=”solid” bg_image_animation=”none”][vc_column_text]
Changes to the Requirement for Consolidating VIEs
[/vc_column_text][divider line_type=”Small Line” line_alignment=”default” line_thickness=”2″ divider_color=”accent-color” animate=”yes” custom_height=”50″ custom_line_width=”80″][/vc_column][/vc_row][vc_row type=”in_container” full_screen_row_position=”middle” scene_position=”center” text_color=”dark” text_align=”left” overlay_strength=”0.3″ shape_divider_position=”bottom” bg_image_animation=”none”][vc_column column_padding=”no-extra-padding” column_padding_position=”all” background_color_opacity=”1″ background_hover_color_opacity=”1″ column_link_target=”_self” column_shadow=”none” column_border_radius=”none” width=”1/1″ tablet_width_inherit=”default” tablet_text_alignment=”default” phone_text_alignment=”default” column_border_width=”none” column_border_style=”solid” bg_image_animation=”none”][vc_column_text]
By Linda Marie Pearson, CPA, CFE, Principal
FASB has just amended the FASB Accounting Standards Codification (ASC) related to the requirement for consolidating VIEs. FASB issued Accounting Standards Update No. 2018-17, Consolidation (Topic 810) to communicate how the ASC was amended. Here is what you need to know about the change:
Changes to Current GAAP |
Amends the private company alternative used for applying the consolidation rules to variable interest entities (VIEs) by allowing a private company to make an accounting policy election to not apply VIE guidance to legal entities under common control when certain criteria are met. |
Effective Date |
The change is effective for fiscal years beginning after December 15, 2020; which, for our December 31st clients, this means the fiscal year ending December 31, 2021. However, an important note is that early application is permitted. |
Who is Affected? |
Applies to private companies. |
Prior to the Amendment |
Private companies were limited to using the alternative approach for only those entities in which there were leasing activities between the entities. |
Main Provisions |
The alternative approach can be elected if all of the following circumstances exist:a. The reporting entity and the legal entity are under common control.b. The reporting entity and the legal entity are not under common control of a public business entity.c. The legal entity under common control is not a public business entity.d. The reporting entity does not directly or indirectly have a controlling financial interest in the legal entity.Adds several new disclosure requirements to provide detail about its involvement with, and exposure to, the legal entity under common control. |
Implementing |
Retrospectively |
Changes to the Disclosures |
Be sure to update your Significant Accounting Policy footnote to include a disclosure stating that the accounting alternative was elected as well as add the new disclosure requirements. |
For more information about changes to the requirements for consolidating VIEs, please contact Linda Pearson at 401-752-0566.
[/vc_column_text][/vc_column][/vc_row][vc_row type=”full_width_content” full_screen_row_position=”middle” equal_height=”yes” content_placement=”middle” scene_position=”center” text_color=”light” text_align=”left” top_padding=”100″ overlay_strength=”0.3″ shape_divider_position=”bottom” bg_image_animation=”none” shape_type=””][vc_column centered_text=”true” column_padding=”padding-8-percent” column_padding_position=”all” background_color=”#002a5c” background_color_opacity=”1″ background_color_hover=”#002a5c” background_hover_color_opacity=”0.6″ column_link_target=”_self” column_shadow=”none” column_border_radius=”none” width=”1/1″ tablet_width_inherit=”default” tablet_text_alignment=”default” phone_text_alignment=”default” column_border_width=”none” column_border_style=”solid” bg_image_animation=”none”][vc_custom_heading text=”Get in Touch” font_container=”tag:h5|text_align:center|color:rgba(255%2C255%2C255%2C0.7)” use_theme_fonts=”yes”][vc_custom_heading text=”How can we help you define the future?” font_container=”tag:h2|text_align:center” use_theme_fonts=”yes”][nectar_btn size=”medium” button_style=”see-through-2″ hover_text_color_override=”#ffffff” icon_family=”none” url=”https://www.sansiveri.com/contact-us/” text=”Contact Us” margin_top=”25″][/vc_column][/vc_row]