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- US GAAP
This Roadmap provides Deloitte’s insights into and interpretations of the guidance on
accounting for equity method investments and joint ventures. The 2021 edition
includes updated and expanded guidance (see Appendix
E for details) as well as On the
Radar, a new section that briefly summarizes emerging issues and
trends related to the accounting and financial reporting topics addressed in the
Roadmap.
Although Chapter 6 in this publication covers the presentation and
disclosure requirements for equity method investments for SEC registrants, readers
who wish to explore this topic in depth may consult Deloitte’s Roadmap SEC
Reporting Considerations for Equity Method Investees.
The accounting principles related to equity method investments and
joint ventures have been in place for many years, but they can be difficult to
apply. The lack of prescriptive guidance surrounding initial measurement upon
formation of a joint venture and accounting for equity method basis differences, as
well as on the calculation of an investor’s share of earnings or losses of an
investee, particularly in complex capital structures, has resulted in diversity in
practice. For these reasons, accounting for equity method investments and joint
ventures can be a particularly challenging aspect of U.S. GAAP.
This Roadmap is written on the assumption that entities have adopted
certain accounting standards that affect the accounting for equity method
investments, including, but not limited to, FASB Accounting Standards Update (ASU)
2016-01, Recognition and Measurement of Financial Assets and Financial
Liabilities.