ASC

ASC 810-930

Extractive Activities—Mining

810 Consolidation

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In brief

IntermediateConsolidationPresentationIndustry-specificFinancial statement presentation

This Subtopic addresses when a mining entity may use proportionate consolidation — presenting its pro rata share of an investee's assets, liabilities, revenues, and expenses on a gross basis rather than as a one-line equity method investment. Proportionate consolidation is permitted only where it has been established industry practice, and for extractive activities it is limited to unincorporated legal entities whose activities are confined to the extraction of mineral resources. Entities engaged in refining, marketing, or transporting extracted minerals are not "in an extractive industry" for this purpose.

Key points (5)
  • Proportionate consolidation is allowed only in industries in which it has been industry practice, and this Subtopic applies that guidance to mining (810-930-05-1).
  • Under paragraph 810-10-45-14, proportionate gross financial statement presentation is not appropriate for an investment in an unincorporated legal entity accounted for by the equity method unless the investee is in the construction industry (910-810-45-1) or an extractive industry (932-810-45-1) (810-930-45-1).
  • An entity is in an extractive industry only if its activities are limited to the extraction of mineral resources, such as oil and gas exploration and production (810-930-45-1).
  • Activities such as refining, marketing, or transporting extracted mineral resources disqualify an entity from extractive-industry treatment and thus from proportionate gross presentation (810-930-45-1).
  • The scope of this Subtopic follows the Scope and Scope Exceptions of Section 930-10-15 (810-930-15-1).

For students. Proportionate consolidation is a narrow exception to the general rule that equity method investments are presented on one line; the common mistake is assuming any mining or energy company qualifies — the investee must be an unincorporated entity whose activities are limited to extraction, so downstream refining, marketing, or transport activities knock it out.

proportionate consolidationpro rata gross presentationequity method investmentunincorporated legal entityextractive industrymineral resourcesundivided interestmining joint venture

Machine-generated study aid for ASC 810-930. Check the source paragraphs below.

810-930-05Overview and Background

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810-930-05-1
Proportionate consolidation is allowed in industries in which it has been industry practice. This Subtopic provides guidance on proportionate consolidation for the mining industry.

810-930-15Scope and Scope Exceptions

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Overall Guidance

810-930-15-1
This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 930-10-15.

810-930-45Other Presentation Matters

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Proportionate Consolidation

810-930-45-1
Paragraph 810-10-45-14 explains that a proportionate gross financial statement presentation is not appropriate for an investment in an unincorporated legal entity accounted for by the equity method of accounting unless the investee is in either the construction industry (see paragraph 910-810-45-1) or an extractive industry (as discussed in this Topic and paragraph 932-810-45-1). As indicated in that paragraph, an entity is in an extractive industry only if its activities are limited to the extraction of mineral resources (such as oil and gas exploration and production) and not if its activities involve related activities such as refining, marketing, or transporting extracted mineral resources.

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