The amendments in this Update affect reporting
entities that are required to determine whether they should consolidate
a legal entity under the guidance within the Variable Interest Entities
Subsections of Subtopic 810-10, Consolidation—Overall.
A private company (reporting entity) may elect
not to apply VIE guidance to legal entities under common control (including
common control leasing arrangements) if both the parent and the legal
entity being evaluated for consolidation are not public business entities.
The accounting alternative provides an accounting policy election
that a private company will apply to all current and future legal
entities under common control that meet the criteria for applying
this alternative. If the alternative is elected, a private company
should continue to apply other consolidation guidance, particularly
the voting interest entity guidance, unless another scope exception
Indirect interests held through related parties
in common control arrangements should be considered on a proportional
basis for determining whether fees paid to decision makers and service
providers are variable interests. This is consistent with how indirect
interests held through related parties under common control are considered
for determining whether a reporting entity must consolidate a VIE.
This Accounting Standards Update is the final
version of Proposed Accounting Standards Update 2017–240—Consolidation (Topic 810)—Targeted Improvements
to Related Party Guidance for Variable Interest Entities, which
has been deleted.
Issued: October 31, 2018