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:
ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting.
ASU 2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets.
ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities.
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.