Appendix G — Roadmap Updates for 2023

Impact of Accretion of Temporary Equity

Added a new section on the impact of the accretion of temporary equity to the recognition of equity method earnings.

Earnings or Losses of a Consolidated Subsidiary’s Investee

Added a new section, including new Example 5-20, on the accounting for investments held by one or more consolidated subsidiaries.

Decrease in Level of Ownership Interest Results in Loss of Control Over the Investee (Consolidation to Equity Method)

Added a new section discussing the accounting for a decrease in the level of ownership interest resulting in a loss of control over the investee.

Other Considerations — Dissolution

Added a new section on the accounting by an investor upon a dissolution of the investee.

Other Considerations — Spin-Off Transactions

Added a new section discussing the investor’s accounting for an investee spin-off transaction.

Other Considerations — Common-Control Contributions

Added a new section on the accounting by a third-party investor when there is a common-control transaction between the investee and its parent or an associate in exchange for additional shares.

Investor’s Recognition of ITCs Generated by an Investee

Added a new section to provide reference to Section 12.3.4 of Deloitte’s Roadmap Income Taxes for guidance on how an investor accounting for its investment in a pass-through entity under the equity method should account for the tax benefits received in the form of ITCs.

Accounting by the Joint Venture After Adopting ASU 2023-05

Added a new chapter on the accounting by joint ventures after the adoption of ASU 2023-05. Chapter 9 in the 2022 version (“Accounting by the Venturer”) was moved to Chapter 10.

ASC 323-740 Before the Adoption of ASU 2023-02

Added a new appendix discussing how to account for LIHTC investments in accordance with ASC 323-740 before the adoption of ASC 2023-02.

ASC 323-740 After the Adoption of ASU 2023-02

Added a new appendix discussing how to account for tax equity investments in accordance with ASC 323-740 after the adoption of ASC 2023-02.

Overview

Added a table highlighting the different accounting models that can be relevant to equity investments.

3.4.2

Investment in an Entity That Invests in QAHPs

Deleted the discussion on accounting for a QAHP. Content pertaining to the application of the proportional amortization method has been included in new Appendixes C and D.

Contribution of Nonfinancial Assets or In-Substance Nonfinancial Assets That Do Not Constitute a Business or Nonprofit Activity

Added Example 4-5 to address the accounting for a contribution to an equity method investment upon formation. Renumbered all subsequent examples in Chapter 4.

Basis Differences

Updated to include additional discussion related to accounting for intangible assets as part of the initial measurement of an equity method investment.

Disproportionate Allocation of an Investee’s Earnings or Losses in Relation to an Investor’s Ownership Interest

Updated discussion of the selection of an allocation method when there is significant risk that an allocation will be unwound in subsequent periods.

Investee Applies Different Accounting Policies Under U.S. GAAP

Updated discussion of the impact of an equity method investee applying different accounting policies than the investor. Specifically addressed the situation in which an investor and an equity method investee enter into a sales contract that the investor determines is a derivative, and the investor applies the normal purchases and normal sales scope exception and the equity method investee does not.

Investee Adopts a New Accounting Standard on a Different Date

Added discussion of the impact of an equity method investee’s adoption of a new accounting standard before an investor. Removed Example 5-7, which addressed specific transition considerations for an equity method investee’s adoption of ASC 842 and ASC 606. Renumbered Examples 5-8 through 5-20.

Accounting for an Investor’s Share of Earnings on a Time Lag

Updated to discuss the requirements in situations in which (1) an investor that did not previously account for an equity method investee on a lag determines that it should be reporting equity method earnings on a lag or (2) an investor accounts for an equity method investment on a lag but wants to extend the length of the lag period.

Intra-Entity Profits and Losses

Added discussion of the inconsistency in the elimination of intra-entity profits recognized under ASC 610-20 compared with the treatment of intra-entity revenue in the scope of ASC 606. Also added discussion of factors to consider in the determination of whether intra-entity transactions are at arm’s length.

Amortization or Accretion of Basis Differences

Updated to discuss the impact of equity method basis differences on the calculation of gain or loss recognized when an equity method investment is disposed of.

Equity Method Losses That Exceed the Investor’s Equity Method Investment Carrying Amount

Added discussion of the accounting when an imminent return to profitability was initially assured but subsequently is no longer assured.

Collateral of the Investee Held by the Investor When Equity Losses Exceed the Investor’s Investment

Added discussion of the accounting when the investee extinguishes or settles the loan guaranteed by the investor.

5.5.5

Qualified Affordable Housing Project Investments

Deleted the discussion on accounting for a QAHP. Content pertaining to the application of the proportional amortization method has been included in new Appendixes C and D.

Increase in Level of Ownership or Degree of Influence — Control Initially Obtained (From Equity Method to Consolidation Accounting)

Added discussion of the accounting considerations when the investee and investors are not under common control and the investee is a business as defined in ASC 805-10 or a VIE as defined in ASC 810-10 or is an asset acquisition. Also updated to discuss the accounting considerations when the investor and investee are under common control.

Increase in Level of Ownership or Degree of Influence — Significant Influence Initially Obtained (ASC 321 to Equity Method)

Added discussion of the requirement to remeasure equity investments under ASC 321 before the application of ASC 323.

Reassessment of the Joint Venture Determination

Added a Changing Lanes discussing the issuance of ASU 2023-05.

Accounting by the Joint Venture Before Adopting ASU 2023-05

Revised content to reflect the options for a joint venture accounting for its net assets at formation (i.e., the carry-over approach or early adoption of ASU 2023-05).