FASB Proposes Reorganizing Topic 810 Consolidation Guidance

Chris Gaetano
Published Date:
Sep 20, 2017

The Financial Accounting Standards Board (FASB) has proposed reorganizing the consolidation guidance located in Topic 810 in response to stakeholder feedback saying that the way it's currently arranged in the accounting literature is confusing. 

"Certain stakeholders expressed that consolidation guidance within Topic 810, particularly the [Variable Interest Entity] guidance, is difficult to understand and apply as currently organized within the Codification. Some respondents suggested rewriting the consolidation guidance in '“plain English' to simplify the guidance along with making it easier to understand," said the FASB in the exposure draft. 

The FASB has proposed that the consolidation guidance be reorganized into a new section, Topic 812, with separate subtopics for variable interest entities and voting interest entities. The guidance for "Consolidation for Entities Controlled by Contract" currently in Topic 810 would be moved to Topic 958, Not-for-Profit Entities, as that guidance is applicable only for not-for-profits. The FASB would also clarify the language regarding research and development agreements to make it easier to understand without changing analyses performed or outcomes currently reached by stakeholders. 

The FASB has not yet set what the effective date for the changes would be, if approved. 

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