The FASB expects to issue a final standard amending the current consolidation guidance in the coming months. The new consolidation standard will make targeted changes to the current consolidation guidance.
The FASB completed deliberations on its consolidation project in July 2014 and expects to issue a final consolidation standard in the coming months. The new consolidation standard will make targeted changes to the current consolidation guidance and end the deferral granted to investment companies from applying the variable interest entity (VIE) guidance. It is primarily intended to limit the circumstances where asset managers will consolidate funds they manage, but the changes will apply to all entities. As such, consolidation conclusions, as well as applicable disclosure requirements, could change for entities in all industries. Companies involved with partnerships and investment companies may be the most affected. Given the changes impact several steps in the VIE model, all companies will need to revisit their previous consolidation analyses, which may be time consuming. In addition, as companies enter into new transactions, they should consider the consolidation conclusions under the new guidance. The new consolidation standard will be effective in 2016 for calendar year-end public companies, and early adoption will be permitted.