This publication was updated on May 7, 2022, to reflect the SEC’s May 3, 2022, sample letter to companies regarding disclosures about the financial impact of the Russia-Ukraine war and related supply-chain issues. Note that it was also updated on March 31, 2022, to address additional financial reporting and accounting considerations related to asset seizure, potential effects of deconsolidation on the cumulative translation adjustment of a foreign entity, and the possible impacts of the conversion of contracts to Russian rubles. Text that has been added or amended since this publication’s initial issuance has been marked with a boldface italic date in brackets.
For titles of FASB Accounting Standards Codification (ASC) references, see Deloitte’s “Titles of Topics and Subtopics in the FASB Accounting Standards Codification.”
However, if an entity concludes that a nonoperating gain or loss is related to the war, we would expect the gain or loss to remain a nonoperating item (i.e., classification as “war-related” does not change the characteristic of the gain or loss as operating vs. nonoperating).
FASB Accounting Standards Update (ASU) No. 2018-19, Codification Improvements to Topic 326, Financial Instruments — Credit Losses.
FASB Accounting Standards Update No. 2016-13, Measurement of Credit Losses on Financial Instruments.
Similarly, the determination of whether a reporting entity should consolidate a voting interest entity (i.e., a legal entity that is not a VIE) is also a continual process. That is, the reporting entity should monitor specific transactions or events that affect whether it holds a controlling financial interest. See Appendix D of Deloitte’s Roadmap Consolidation — Identifying a Controlling Financial Interest.
An equity method basis difference is the difference between the cost of an equity method investment and the investor’s proportionate share of the carrying value of the investee’s underlying assets and liabilities. The investor is required to account for this basis difference as if the investee were a consolidated subsidiary. See Section 4.5 of Deloitte’s Roadmap Equity Method Investments and Joint Ventures for further discussion of equity method basis differences.
SEC Staff Accounting Bulletin (SAB) Topic 5.Y, “Accounting and Disclosures Related to Loss Contingencies.”
For example, as a result of the deemed repatriation transition tax in the Tax Cuts and Jobs Act of 2017.