Preface

We are pleased to present the 2023 edition of Equity Method Investments and Joint Ventures. This Roadmap provides Deloitte’s insights into and interpretations of the guidance on these topics. The 2023 edition includes a new Chapter 9 — which discusses a joint venture’s accounting after adopting ASU 2023-05 — as well as new Appendixes C and D — which summarize and provide comprehensive examples of the accounting for certain limited liability equity investments before and after, respectively, the adoption of ASU 2023-02 (the proportional amortization method). Appendix G highlights key changes made to the Roadmap since publication of the 2022 edition.

The accounting principles related to equity method investments have been in place for many years, but they can be difficult to apply. In addition, diversity in practice has resulted from a lack of prescriptive guidance on the accounting for equity method basis differences and the calculation of an investor’s share of earnings or losses of an investee, particularly in complex capital structures. This Roadmap is intended to help entities navigate these challenges.

It is assumed in the Roadmap that entities have adopted the guidance in certain ASUs that affect the accounting for equity method investments. These include, but are not limited to:

• ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting.
• ASU 2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets.
• ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities.
• ASU 2014-09, Revenue From Contracts With Customers.

While Chapter 6 of this Roadmap 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.

We hope that you find this Roadmap a valuable resource, and we welcome your suggestions for future improvements. If you need assistance with applying the guidance or have other questions about this topic, we encourage you to consult our technical specialists and other professional advisers.