Roadmap
Equity Method Investments
and Joint Ventures (November 2022)
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This Roadmap provides
Deloitte’s insights into and interpretations of the guidance on
accounting for equity method investments and joint ventures.
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. In addition, diversity in practice has resulted from a lack
of prescriptive guidance on (1) initial measurement upon the
formation of a joint venture, (2) the accounting for equity method
basis differences, and (3) the calculation of an investor’s share of
earnings or losses of an investee, particularly in complex capital
structures. This Roadmap is intended to help entities navigate these
challenges.
It is assumed in the
Roadmap that entities have adopted the guidance in certain FASB
Accounting Standards Updates (ASUs) that affect the accounting for
equity method investments. These include, but are not limited to:
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ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting.
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ASU 2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets.
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ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities.
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ASU 2014-09, Revenue From Contracts With Customers.
While 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 Roadmap SEC Reporting
Considerations for Equity Method
Investees.
Also available is the latest
edition of On the
Radar, a high-level summary of emerging
issues and trends related to the accounting and
financial reporting topics addressed in the
Roadmap.
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.