The recent FASB proposal aims to eliminate the development stage entity reporting requirements and also amends the consolidation guidance.
In November 2013, the FASB issued a proposal to eliminate the concept of a DSE (development stage entity) from today’s accounting guidance in its entirety. If adopted, entities that are in their development stage would no longer be required to present and disclose incremental information, such as inception-to-date information.
The proposal includes a consequential amendment to the consolidation guidance that would cause more DSEs to be considered variable interest entities (VIEs). This would require entities that have a variable interest in a DSE to apply the more complex VIE consolidation analysis and in certain situations consolidation conclusions could change. Incremental VIE disclosures would also be required.