FASB Issues Proposed ASU on Interaction Between Standards on Equity Method and Financial Instruments
July 30, 2019
The FASB has issued a proposed Accounting Standards Update (ASU), Clarifying the Interactions Between Topic 321, Topic 323, and Topic 815.
The proposed ASU, which is being released in response to an EITF consensus-for-exposure, clarifies that (1) when an entity applies the ASC 321 measurement alternative, it should consider observable transactions that require it to either apply or discontinue the equity method immediately before applying or after discontinuing ASC 323 and (2) an entity should apply ASC 321 rather than ASC 323 to account for forward contracts and purchased options to acquire an equity instrument that do not meet the definition of a derivative under ASC 815.
Comments on the proposed ASU are due by August 29, 2019. For more information, see Deloitte’s June 2019 EITF Snapshot as well as the press release and proposed ASU on the FASB’s Web site.