Proposed Accounting Standards Update (ASU), Investments-Equity Method and Joint Ventures (ASC 323): Simplifying the Equity Method of Accounting/Proposed Accounting Standards Update (ASU), Derivatives and Hedging (ASC 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships (Issue 15-D, A proposed consensus of the FASB Emerging Issues Task Force (EITF))/Proposed Accounting Standards Update (ASU), Derivatives and Hedging (ASC 815): Contingent Put and Call Options in Debt Instruments (Issue 15-E, A proposed consensus of the EITF)

Abstract

The proposed accounting standards update (ASU) related to Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 323, Investments-Equity Method and Joint Ventures, has been proposed by the FASB, while the two proposed ASUs related to ASC 815, Derivatives and Hedging, are proposed consensus positions of the Emerging Issues Task Force (EITF). The FASB has taken on a Simplification Initiative that is intended to identify, evaluate, and improve areas of generally accepted accounting principles in order to reduce the cost and complexity of providing useful information to financial statement users. The issues in the proposed ASU were identified by stakeholders who believe that the existing accounting guidance for equity method investments adds cost and complexity to financial statement reporting without adding to the usefulness of the information provided to investors. It is costly to determine the fair value of the identifiable assets and liabilities assumed and an equity investor may not be able to obtain the information because the investor does not control the investee.