The guidance on presentation and disclosure of equity method investments is similar for private and public companies. However, the SEC has particular views regarding income statement presentation and additional rules surrounding the disclosure requirements for equity method investees.

As discussed in FSP 10.6, SEC registrants are required to disclose the tax components of the investee’s effective tax rate if the investee’s effective tax rate differs by more than 5% from the statutory Federal income tax rate. This disclosure is not required for private companies.

In addition, the SEC rules are more prescriptive with respect to disclosures required for summarized financial information of equity method investees. Summarized financial information of equity method investees is required to be disclosed under ASC 323 if the investments are material to the investor. However, judgment must be used to determine whether an investment is material to the balance sheet and income statement of the investor. In contrast, SEC rules establish significance tests which determine whether an investor is required to disclose the equity method investee summarized financial information.

S-X 4-08(g) also establishes the specific financial statement captions that must be included in the disclosure. In contrast, ASC 323 does not specify the captions that must be included in the summarized financial information.

Lastly, S-X 10-01(b)(1) specifies interim disclosure requirements for summarized financial information of equity method investees, while such information is not explicitly required under the ASC 270 minimum disclosure requirements.