{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/810/10/#sec-99-sec-materials","source":"FASB Accounting Standards Codification, Basic View","usage":"Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective.","topic":"810","topic_title":"Consolidation","subtopic":"810-10","subtopic_title":"Overall","section":{"number":"S99","label":"SEC 99 SEC Materials","anchor":"sec-99-sec-materials","is_sec":true,"groups":[{"block":null,"heading":"SEC Rules, Regulations, and Interpretations","paragraphs":[{"citation":"810-10-S99-1","para":"S99-1","html":"<div class=\"asc-body\"><div class=\"norm-text\">The following is the text of Regulation S-X Rule 3A-01, (17 CFR 210.3A-01).<ul class=\"ul simple\" id=\"d3e355010-122828__GUID-14AC591C-38B9-452E-99C4-65AA753CF939\"><li class=\"li\" id=\"d3e355010-122828__SL6431224-122828\"><div class=\"p\"><span class=\"sfragment\" id=\"sfr_90E06663-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">[Reserved]</span></span></div></li></ul></div></div>","snippet":"The following is the text of Regulation S-X Rule 3A-01, (17 CFR 210.3A-01).\n[Reserved]","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:03218f1d2653806b01b0b87d89da9a5e2030cb68980864ee7dc3926142173c36","downloaded_from":"2026-09-10T01:29:44.246Z","last_downloaded_at":"2026-09-10T01:29:44.246Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479836","source_sha256":"308b6ee5f9def716cd502d6d33626c1535f5afa11e48700ca7a18f46916c760b"}},{"citation":"810-10-S99-2","para":"S99-2","html":"<div class=\"asc-body\"><div class=\"norm-text\">The following is the text of Regulation S-X Rule 3A-02, Consolidated Financial Statements of the Registrant and its Subsidiaries (17 CFR 210.3A-02).<ul class=\"ul simple\" id=\"d3e355029-122828__GUID-257F5128-B1CD-4699-B353-488D606B2CCB\"><li class=\"li\" id=\"d3e355029-122828__SL6431226-122828\"><div class=\"p\"><span class=\"sfragment\" id=\"sfr_90E0682D-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">In deciding upon consolidation policy, the registrant must consider what financial presentation is most meaningful in the circumstances and should follow in the consolidated financial statements principles of inclusion or exclusion which will clearly exhibit the financial position and results of operations of the registrant. There is a presumption that consolidated financial statements are more meaningful than separate financial statements and that they are usually necessary for a fair presentation when one entity directly or indirectly has a controlling financial interest in another entity. Other particular facts and circumstances may require combined financial statements, an equity method of accounting, or valuation allowances in order to achieve a fair presentation. </span></span></div><ul class=\"ul simple\" id=\"d3e355029-122828__GUID-31D7D1B1-6663-44BE-B78D-BECCCC012C27\"><li class=\"li\" id=\"d3e355029-122828__SL6431229-122828\"><div class=\"p\"><span class=\"sfragment\" id=\"sfr_90E06B01-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">(a) Majority ownership: Among the factors that the registrant should consider in determining the most meaningful presentation is majority ownership. Generally, registrants shall consolidate entities that are majority owned and shall not consolidate entities that are not majority owned. The determination of <em class=\"ph i\">majority ownership</em> requires a careful analysis of the facts and circumstances of a particular relationship among entities. In rare situations, consolidation of a majority owned subsidiary may not result in a fair presentation, because the registrant, in substance, does not have a controlling financial interest (for example, when the subsidiary is in legal reorganization or in bankruptcy). In other situations, consolidation of an entity, notwithstanding the lack of technical majority ownership, is necessary to present fairly the financial position and results of operations of the registrant, because of the existence of a parent-subsidiary relationship by means other than record ownership of voting stock. </span></span></div></li><li class=\"li\" id=\"d3e355029-122828__SL6431230-122828\"><div class=\"p\"><span class=\"sfragment\" id=\"sfr_90E06CBB-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">(b) [Reserved]</span></span></div><ul class=\"ul simple\" id=\"d3e355029-122828__GUID-13EB06C2-7728-48C1-8616-763B33331E50\"><li class=\"li\" id=\"d3e355029-122828__SL6431237-122828\"><div class=\"p\"><span class=\"sfragment\" id=\"sfr_90E06E41-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">[83 FR 50200, Oct. 4, 2018]</span></span></div></li></ul></li></ul></li></ul></div></div>","snippet":"The following is the text of Regulation S-X Rule 3A-02, Consolidated Financial Statements of the Registrant and its Subsidiaries (17 CFR 210.3A-02).\nIn deciding upon consolidation policy, the registrant must consider wha…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0d0febbda7b1a1c6b4ef6be948b91e8ab9ca8b9e65920d4caa74c638ef3b58d6","downloaded_from":"2026-09-10T01:29:44.246Z","last_downloaded_at":"2026-09-10T01:29:44.246Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479836","source_sha256":"308b6ee5f9def716cd502d6d33626c1535f5afa11e48700ca7a18f46916c760b"}},{"citation":"810-10-S99-3","para":"S99-3","html":"<div class=\"asc-body\"><div class=\"norm-text\">The following is the text of Regulation S-X Rule 3A-03, Statement as to Principles of Consolidation or Combination Followed (17 CFR 210.3A-03).<ul class=\"ul simple\" id=\"d3e355096-122828__GUID-8D96A7AC-2D8F-4BEA-967A-52801B0AAE98\"><li class=\"li\" id=\"d3e355096-122828__SL6431238-122828\"><div class=\"p\"><span class=\"sfragment\" id=\"sfr_90E06FCC-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">(a) [Reserved]</span></span></div></li><li class=\"li\" id=\"d3e355096-122828__SL6431239-122828\"><div class=\"p\"><span class=\"sfragment\" id=\"sfr_90E07150-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">(b) As to each consolidated financial statement and as to each combined financial statement, if there has been a change in the persons included or excluded in the corresponding statement for the preceding fiscal period filed with the Commission that has a material effect on the financial statements, the persons included and the persons excluded shall be disclosed. </span></span></div><ul class=\"ul simple\" id=\"d3e355096-122828__GUID-3187E491-C494-43CF-A3EA-A6E4B2C0B020\"><li class=\"li\" id=\"d3e355096-122828__SL6431240-122828\"><div class=\"p\"><span class=\"sfragment\" id=\"sfr_90E07370-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">[37 FR 14597, July 21, 1972. Redesignated at 45 FR 63687, Sept. 25, 1980, and 46 FR 56179, Nov. 16, 1981; 83 FR 50200, Oct. 4, 2018]</span></span></div></li></ul></li></ul></div></div>","snippet":"The following is the text of Regulation S-X Rule 3A-03, Statement as to Principles of Consolidation or Combination Followed (17 CFR 210.3A-03).\n(a) [Reserved]\n(b) As to each consolidated financial statement and as to eac…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:77a771fb2cc608250fc80c92b14fdaed12af8ea1cc7f9dba23305f9bb4b7c78c","downloaded_from":"2026-09-10T01:29:44.246Z","last_downloaded_at":"2026-09-10T01:29:44.246Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479836","source_sha256":"308b6ee5f9def716cd502d6d33626c1535f5afa11e48700ca7a18f46916c760b"}},{"citation":"810-10-S99-4","para":"S99-4","html":"<div class=\"asc-body\"><div class=\"norm-text\">The following is the text of Regulation S-X Rule 3A-04 (17 CFR 210.3A-04).<ul class=\"ul simple\" id=\"d3e355115-122828__GUID-C017397E-4124-498B-8BA9-327D75788A8E\"><li class=\"li\" id=\"d3e355115-122828__SL6431241-122828\"><div class=\"p\"><span class=\"sfragment\" id=\"sfr_90E07510-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">[Reserved]</span></span></div></li></ul></div></div>","snippet":"The following is the text of Regulation S-X Rule 3A-04 (17 CFR 210.3A-04).\n[Reserved]","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:21eb33bf597dbf6c5014cd59ce7b46ed0051e96c303f36bcd25686c3bd7b31b2","downloaded_from":"2026-09-10T01:29:44.246Z","last_downloaded_at":"2026-09-10T01:29:44.246Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479836","source_sha256":"308b6ee5f9def716cd502d6d33626c1535f5afa11e48700ca7a18f46916c760b"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dba242cbb505e110c31fb85690d3fb677249c9edc09c48f5a088718aeeb132f5","downloaded_from":"2026-09-10T01:29:44.246Z","last_downloaded_at":"2026-09-10T01:29:44.246Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479836","source_sha256":"308b6ee5f9def716cd502d6d33626c1535f5afa11e48700ca7a18f46916c760b"}},{"block":null,"heading":"SEC Staff Guidance","paragraphs":[{"citation":"810-10-S99-5","para":"S99-5","html":"<div class=\"asc-body\"><div class=\"norm-text\">The following is the text of SAB Topic 5.E, Accounting for Divestiture of a Subsidiary or Other Business Operations.<ul class=\"ul simple\" id=\"d3e355142-122828__GUID-ECD9DE3C-BFE0-429B-B7CB-BE49AA61146C\"><li class=\"li\" id=\"d3e355142-122828__SL6431244-122828\"><div class=\"p\"><span class=\"sfragment\" id=\"sfr_90E076A5-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Facts: Company X transferred certain operations (including several subsidiaries) to a group of former employees who had been responsible for managing those operations. Assets and liabilities with a net book value of approximately $8 million were transferred to a newly formed entity-Company Y-wholly owned by the former employees. The consideration received consisted of $1,000 in cash and interest bearing promissory notes for $10 million, payable in equal annual installments of $1 million each, plus interest, beginning two years from the date of the transaction. The former employees possessed insufficient assets to pay the notes and Company X expected the funds for payments to come exclusively from future operations of the transferred business. </span></span></div></li><li class=\"li\" id=\"d3e355142-122828__SL6431245-122828\"><div class=\"p\"><span class=\"sfragment\" id=\"sfr_90E07830-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Company X remained contingently liable for performance on existing contracts transferred and agreed to guarantee, at its discretion, performance on future contracts entered into by the newly formed entity. Company X also acted as guarantor under a line of credit established by Company Y. </span></span></div></li><li class=\"li\" id=\"d3e355142-122828__SL6431246-122828\"><div class=\"p\"><span class=\"sfragment\" id=\"sfr_90E079A6-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The nature of Company Y's business was such that Company X's guarantees were considered a necessary predicate to obtaining future contracts until such time as Company Y achieved profitable operations and substantial financial independence from Company X. </span></span></div></li><li class=\"li\" id=\"d3e355142-122828__SL6431247-122828\"><div class=\"p\"><span class=\"sfragment\" id=\"sfr_90E07B17-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Question: If deconsolidation of the subsidiaries and business operations is appropriate, can Company X recognize a gain?</span></span></div></li><li class=\"li\" id=\"d3e355142-122828__SL6431248-122828\"><div class=\"p\"><span class=\"sfragment\" id=\"sfr_90E07C5D-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Interpretive Response: Before recognizing any gain, Company X should identify all of the elements of the divesture arrangement and allocate the consideration exchanged to each of those elements. In this regard, we believe that Company X would recognize the guarantees at fair value in accordance with FASB ASC Topic <a altsource=\"GUID-B9BF8A6B-4655-41A8-BF76-5BEFB1B846A3.ditamap\" class=\"ditamap\">460</a>, Guarantees; the contingent liability for performance on existing contracts in accordance with FASB ASC Topic <a altsource=\"GUID-1271E23D-73B8-4EFD-8F2E-276D1D0ECC8F.ditamap\" class=\"ditamap\">450</a>, Contingencies; and the promissory notes in accordance with FASB ASC Topic <a altsource=\"GUID-848F1C96-68A0-4270-A4CD-D7487E1B0F3B.ditamap\" class=\"ditamap\">310</a>, Receivables, and FASB ASC Topic <a altsource=\"GUID-AC1D0F5C-2199-496C-9FF0-FAE561FCBAAA.ditamap\" class=\"ditamap\">835</a>, Interest. </span></span></div></li></ul></div></div>","snippet":"The following is the text of SAB Topic 5.E, Accounting for Divestiture of a Subsidiary or Other Business Operations.\nFacts: Company X transferred certain operations (including several subsidiaries) to a group of former e…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a5e7424f4480806b7106d62ac413b857045a597982d4ac11f38a79b4823f8ce7","downloaded_from":"2026-09-10T01:29:44.246Z","last_downloaded_at":"2026-09-10T01:29:44.246Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479836","source_sha256":"308b6ee5f9def716cd502d6d33626c1535f5afa11e48700ca7a18f46916c760b"}},{"citation":"810-10-S99-6","para":"S99-6","html":"<div class=\"asc-body\"><div class=\"norm-text\">The following is the text of the SEC Observer Comment: Accounting for Gain Recognition in Certain Transactions Involving the General Partner in a Master Limited Partnership.<ul class=\"ul simple\" id=\"SL6233273-122828__GUID-B95A3F6F-B30A-4C95-8A58-4CB99265658E\"><li class=\"li\" id=\"SL6233273-122828__SL6431285-122828\"><div class=\"p\"><span class=\"sfragment\" id=\"sfr_90E07DC2-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The SEC staff has objected to immediate gain recognition when the general partner in a Master Limited Partnership has continuing exposure in forms such as debt guarantees, financing commitments, or restrictions on the sale of MLP units. The SEC staff also will not accept immediate gain recognition in transactions when the general partner (who will continue to act in that capacity and exercise significant influence but not control over the MLP) sponsors the <a href=\"/glossary/r/#rollup\" class=\"term\" title=\"A way to create a master limited partnership in which two or more legally separate limited partnerships are combined into one master limited partnership.\"><span>rollup</span></a> of several limited partnerships into a MLP and receives tradable limited partnership units in exchange for relinquishing the rights to certain future fees from the limited partnerships.</span></span></div></li></ul></div></div>","snippet":"The following is the text of the SEC Observer Comment: Accounting for Gain Recognition in Certain Transactions Involving the General Partner in a Master Limited Partnership.\nThe SEC staff has objected to immediate gain r…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f25eaca1ce50243d01cd17ede98a7379d673336836b2f41586abf33e69bf663f","downloaded_from":"2026-09-10T01:29:44.246Z","last_downloaded_at":"2026-09-10T01:29:44.246Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479836","source_sha256":"308b6ee5f9def716cd502d6d33626c1535f5afa11e48700ca7a18f46916c760b"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ec3f10e0c8ac08753d5753e7429d20a6cae806f88db0a80297bbed1c10af15e1","downloaded_from":"2026-09-10T01:29:44.246Z","last_downloaded_at":"2026-09-10T01:29:44.246Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479836","source_sha256":"308b6ee5f9def716cd502d6d33626c1535f5afa11e48700ca7a18f46916c760b"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0244c7a00e30d334dd5ac4391288a3182fe9dcbe6d57bf4cf57502ef1280609d","downloaded_from":"2026-09-10T01:29:44.246Z","last_downloaded_at":"2026-09-10T01:29:44.246Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479836","source_sha256":"308b6ee5f9def716cd502d6d33626c1535f5afa11e48700ca7a18f46916c760b"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0244c7a00e30d334dd5ac4391288a3182fe9dcbe6d57bf4cf57502ef1280609d","downloaded_from":"2026-09-10T01:29:44.246Z","last_downloaded_at":"2026-09-10T01:29:44.246Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479836","source_sha256":"308b6ee5f9def716cd502d6d33626c1535f5afa11e48700ca7a18f46916c760b"}}