Accounting Research Tool
Chapter 4 — Initial Measurement

4.3 Contribution of Nonmonetary Assets

4.3 Contribution of Businesses or Assets for an Investment in an Equity Method Investee

An investor may contribute a business or assets in exchange for an equity method investment or an interest in a joint venture. The accounting for the contribution of a business or assets will generally depend on (1) whether the investee (i.e., the counterparty) is considered to be a customer in the transaction, (2) the nature of the asset that was contributed, and (3) in some cases, the legal form of the transaction.


If the transfer includes other contractual arrangements that are not assets of the seller to be derecognized (e.g., guarantees), those contracts are separated and accounted for in accordance with other ASC topics or subtopics.