On October 26, 2016, the FASB issued ASU 2016-17,1 which amends the consolidation requirements that apply to a single decision maker’s evaluation of interests held through related parties that are under common control when it is determining whether it is the primary beneficiary of a variable interest entity (VIE). The ASU removes the last sentence of ASC 810-10-25-422 (as amended by ASU 2015-023), which states, “Indirect interests held through related parties that are under common control with the decision maker should be considered the equivalent of direct interests in their entirety.” Under the ASU, a reporting entity considers its indirect economic interests in a VIE held through related parties that are under common control on a proportionate basis, in a manner consistent with its consideration of its indirect economic interests held through related parties that are not under common control.
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