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10.5 Equity method investments—statement of other comprehensive income
Publication date: 30 Sep 2023
us Financial statement presentation guide
As discussed in ASC 323-10-35-18, a reporting entity is required to record its proportionate share of its equity method investees' comprehensive income. This requirement is consistent with the guidance in ASC 323-10-35-15, which indicates that an investee's transactions that are of a capital nature and affect the investor's share of the investee's stockholders' equity should be accounted for as if the investee were a consolidated subsidiary.
The format used by an investee to report comprehensive income, including other comprehensive income (OCI), should not impact how the investor displays its proportionate share of OCI of its investee. Accordingly, an investor is permitted to combine its proportionate share of OCI from an equity method investment with its own OCI items and report those aggregated amounts (by each category).
Alternatively, as depicted in Figure FSP 10-3, an investor would be permitted to separately report OCI items related to an equity method investee.
Figure FSP 10-3
Separate presentation in the statement of comprehensive income of equity method investee OCI items
Separate presentation in the statement of comprehensive income of equity method investee OCI items
FSP Corp Statement of Comprehensive Income For the year ended December 31, 20X1 |
||
Net income
|
$4,150 |
|
Other comprehensive income, net of deferred income taxes:
|
||
Changes in foreign currency translation adjustments
|
10 |
|
Changes in defined benefit plans:
|
||
Actuarial losses and prior service cost/credit before reclassification to net earnings
|
(50) |
|
Amounts reclassified to net earnings
|
14 |
|
(36) |
||
Ownership share of equity method investment:
|
||
Other comprehensive income, before reclassifications to net earnings
|
21 |
|
Amounts reclassified to net earnings
|
(2) |
|
19 |
||
Other comprehensive income, net of deferred income taxes
|
(7) |
|
Comprehensive income
|
4,143 |
|
Comprehensive income attributable to noncontrolling interests
|
(3) |
|
Comprehensive income attributable to FSP Corp
|
$4,140 |
|
Note X—Changes in accumulated other comprehensive income by component
The following table presents a rollforward of accumulated other comprehensive income, net of tax:
Currency translation adjustments |
Benefit plans |
Equity method investment |
Accumulated other comprehensive loss |
|
Beginning balance, January 1, 20X1
|
$ 20 |
$ (206) |
$ 33 |
$ (153) |
Period change
|
10 |
(36) |
19 |
(7) |
Ending balance, December 31, 20X1
|
$ 30 |
$ (242) |
$ 52 |
$ (160) |
10.5.1 Equity method—foreign entity
Reporting entities should also apply the guidance applicable to OCI and cumulative translation adjustments accounted for in accordance with ASC 830 for equity method investments that are (or are part of) a foreign entity, and for domestic equity method investments that have an investment in a foreign entity. When the equity method is used, the reporting entity’s financial statements should include a proportionate share of any investee’s translation adjustments (e.g., when the investee has a subsidiary that is a foreign entity) in OCI, as well as its proportionate share of the direct effects of translating an equity method investee that reports in a foreign currency (e.g., the investee is a foreign entity). See FX 5 for further guidance on foreign currency translation adjustments.
PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
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