This Roadmap provides Deloitte’s insights into and interpretations of the guidance on accounting for equity method investments and joint ventures. The 2021 edition includes updated and expanded guidance (see Appendix E for details) as well as On the Radar, a new section that briefly summarizes emerging issues and trends related to the accounting and financial reporting topics addressed in the Roadmap. On the Radar is also available as a stand-alone publication.
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 is written on the assumption that entities have adopted certain accounting standards that affect the accounting for equity method investments, including, but not limited to, FASB Accounting Standards Update (ASU) 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities.
This Roadmap replaces the Deloitte Q&As that were contained in ASC 323. To find the text in the Roadmap that corresponds to a former Q&A, select the “Equity Method & Joint Ventures” tab at the bottom of the Q&A to Roadmap Quick Reference Guide and search for the Q&A’s number or title.
Be sure to check out other titles in Deloitte’s Roadmap series, our comprehensive, easy-to-understand collection of accounting guides on selected topics of broad interest to the financial reporting community.