Preface
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:
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ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting.
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ASU 2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets.
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ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities.
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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.
Be sure to check out On the Radar (also available
as a stand-alone
publication), which briefly summarizes
emerging issues and trends related to the accounting and
financial reporting topics addressed in the Roadmap.
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.