United States

FASB Responds to Post-Implementation Review Report about Noncontrolling Interests in Consolidated Financial Statements

Jun 01, 2015
From the Financial Reporting View

The FASB recently responded to the Financial Accounting Foundation’s (FAF) Post-Implementation Review (PIR) Report about FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51 (as codified in FASB ASC Topic 810, Consolidation). Notwithstanding its recommendations, the PIR team concluded, in general, that Statement 160 met its objectives, did not result in unanticipated consequences, and achieved its expected benefits.

In its response, the FASB addressed the PIR Report recommendation for the FASB to provide detailed guidance to address the complexity associated with the requirement for an entity to allocate net income or loss between a parent and the noncontrolling interest if the equity structure is complex (and the net income is not shared proportionally). The FASB responded that it removed detailed allocation guidance that was in the Exposure Draft as it observed that, before Statement 160 was issued, entities were making reasonable and appropriate attributions. Eliminating the detailed allocation guidance also converged Statement 160 with IAS 27, which was one of the issues underlying the need for Statement 160.

The FASB plans to perform outreach to understand whether there are cost-effective solutions that would reduce complexity associated with allocating net income or loss without significantly reducing the usefulness of the information. Additionally, the FASB plans to understand stakeholders’ views about the priority of addressing those concerns vis-à-vis the priority of other projects that the Board could undertake to enhance U.S. GAAP.

Read FASB Response to the FAF Report

Read FAF Post-Implementation Review Report