This chapter discusses the presentation and disclosure requirements for equity method investments and joint ventures. ASC 323, Investments—Equity Method and Joint Ventures, is the primary guidance for accounting for equity method investments, but the SEC also has certain presentation and disclosure requirements for SEC registrants. Generally, ASC 323 requires an equity method investment to be shown on the balance sheet of the investor as a single amount. Likewise, the investor’s share of earnings or losses from an equity method investment should generally be shown on the income statement as a single amount. Alternatives to the single line presentation on the balance sheet and income statement may be used in limited situations, as discussed later in the chapter.
ASC 323 also outlines various disclosures for equity method investments. The extent of the disclosure requirements is predicated on the significance of an investment to the investor’s balance sheet and income statement.
In August 2023, the FASB issued ASU 2023-05, Business Combinations – Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement, which creates guidance to address accounting for contributions received by the joint venture entity upon formation and includes disclosures required at formation.
See EM 3 and EM 4 for guidance on the initial and subsequent measurement of equity method investments. See EM 6 for guidance on accounting for joint ventures.
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