FASB to Consult on Clarification of Interactions on Topics 321 and 323

The Task Force reached a consensus-for-exposure that an entity should: 

• Consider observable transactions that would require the investor to either apply or discontinue the equity method of accounting for applying the measurement alternative under Topic 321 (Investments—Equity Securities), immediately before applying or on discontinuing the equity method under Topic 323 (Investments—Equity Method and Joint Ventures).
• Not consider whether the equity security underlying the forward contract or purchased option would, individually or with existing investments, be accounted for under the equity method on settlement of the forward contract or exercise of the purchased option for purposes of evaluating the characteristic in paragraph 815-10-15-141(a).
• Apply the proposed amendments in the Update resulting from this Issue No. 19-A prospectively. The Task Force also reached a consensus-for-exposure not to require any recurring disclosures related to equity method investments or equity securities that are accounted for under the measurement alternative.
• Disclose, in the period of adoption, the nature of and reasons for the change in accounting principle, the transition method, and a qualitative description of the financial statement line items affected by the change.

Related Links

• Tentative Board Decisions
• Board Meeting Handout (PDF)
• Overview of EITF Meeting

Keywords: Americas, US, Banking, Accounting, Securities, Consensus-for-Exposure, Financial Instruments, Emerging Issues Task Force, FASB