The FASB issued a consolidation standard, ASU 2015-02, Consolidation (Topic 810) – Amendments to the Consolidation Analysis, in February 2015 that makes targeted changes to the accounting guidance used to determine whether one entity should consolidate another.
The consolidation guidance affects, among other considerations:
The consolidation guidance is effective in 2017 for calendar year-end nonpublic entities. Public business entities were required to adopt the guidance in 2016.
Companies will need to reevaluate all variable interests they have in legal entities.This process may be time consuming, particularly for those companies that have many variable interest entities and those that need to apply an entirely new consolidation method to the assessment (e.g., many limited partnerships and investment companies).
Want to get your head around the consolidation model? Listen in as we take a high level look.