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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. 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 A Roadmap to 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 includes pending guidance in several Accounting Standards Updates (ASUs)
issued by the FASB, including, but not limited to, ASU 2016-01, Recognition and
Measurement of Financial Assets and Financial Liabilities; ASU 2014-09,
Revenue From Contracts With Customers; and ASU 2017-05, Clarifying the
Scope of Asset Derecognition Guidance and Accounting for Partial Sales of
Nonfinancial Assets. Within each applicable section, we provide an overview
of significant changes that may result from the adoption of these ASUs; however, the
interpretive guidance within this Roadmap reflects U.S. GAAP before the ASUs’
adoption.