# ASC 810-958: Consolidation — Not-for-Profit Entities Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/810/958/) 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. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T01:33:02.909Z to 2026-09-10T01:33:29.760Z Record version: sha256:9dee30c23957204bd433bc73d8bcf881d62070aed7526aae60736bdd1637d167 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-958: Consolidation — Not-for-Profit Entities ### Machine-generated study aids ```json { "summary": "This subtopic governs when a not-for-profit entity (NFP) must, may, or may not consolidate another entity. Control plus an economic interest is the organizing principle: a majority voting interest or sole corporate membership in another NFP requires consolidation; control through a majority voting interest in the other NFP's board plus an economic interest also requires consolidation; control by other means (e.g., contract) plus an economic interest permits but does not require consolidation; and control or an economic interest alone precludes consolidation. It also covers consolidation of special-purpose-entity lessors, consolidation of for-profit limited partnerships by NFP general or limited partners, and presentation and disclosure of noncontrolling interests.", "key_points": [ "An NFP with a controlling financial interest in another NFP through direct or indirect ownership of a majority voting interest or sole corporate membership shall consolidate it, unless control does not rest with the majority owner or sole corporate member (e.g., bankruptcy), in which case consolidation is prohibited (958-810-25-2; 810-10-15-10); supermajority board voting requirements may overcome the presumption of control (958-810-25-2A, 55-4A).", "Control of a related but separate NFP through a majority voting interest in that NFP's board (ability to appoint a majority of the votes of the fully constituted board) plus an economic interest requires consolidation (958-810-25-3, 55-5); control by other means such as contract or affiliation agreement plus an economic interest permits but does not require consolidation, and is encouraged if consolidation would be meaningful (958-810-25-4).", "Control or an economic interest, but not both, precludes consolidation and instead triggers the related party disclosures of 850-10-50-1 through 50-6 (958-810-25-5; 958-810-50-3).", "NFPs are not subject to the Variable Interest Entities Subsections of Subtopic 810-10 (810-10-15-17); an NFP controlling a for-profit entity via majority voting interest applies the General Subsections of 810-10, and 50%-or-less voting stock investments follow Subtopic 323-10 or Topic 321 (958-810-15-4).", "General partners are presumed to control a for-profit limited partnership regardless of ownership percentage; the presumption is overcome if limited partners hold substantive kick-out rights or substantive participating rights, in which case each general partner uses the equity method (958-810-25-12, 25-14, 25-15), and a limited partner holding more than 50% of kick-out rights through voting interests consolidates unless others have substantive participating rights (958-810-25-16).", "Substantive kick-out rights must be exercisable by a single limited partner or a simple majority (or lower) of unaffiliated limited partners' voting interests with no significant barriers to exercise (958-810-25-19); purely protective rights, such as blocking agreement amendments or non-ordinary-course asset dispositions, do not overcome the presumption (958-810-25-28).", "An NFP lessee must consolidate a special-purpose-entity lessor when substantially all SPE activities involve assets leased to a single lessee, the substantive residual risks and rewards and the underlying debt obligation reside with the lessee, and the SPE's owners lack an initial substantive residual equity capital investment at risk for the entire lease term (958-810-25-8 through 25-10); noncontrolling interests are reported as a separate component of the appropriate class of net assets with a reconciling schedule (958-810-45-1; 50-4 through 50-5)." ], "categories": [ "Consolidation", "Not-for-profit", "Presentation", "Disclosure" ], "audience_level": "advanced", "student_note": "The trap is forgetting that NFPs are exempt from the VIE model, so the analysis turns on the control-plus-economic-interest matrix rather than a primary beneficiary test; also remember that control alone or an economic interest alone precludes consolidation but still requires related party disclosure.", "related_topics": [ "810-10", "958-20", "323-10", "970-323", "954-10", "850-10" ], "key_concepts": [ "economic interest", "sole corporate membership", "majority voting interest in the board", "noncontrolling interest in net assets", "special-purpose-entity lessor", "substantive kick-out rights", "substantive participating rights", "presumption of general partner control" ] } ``` Source downloaded (UTC): 2026-09-10T01:33:02.909Z to 2026-09-10T01:33:02.909Z Record version: sha256:88b2e8902a422d22a499df5a29c1c359fc1d3b31665964e2a723e68faa3f21a1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-958-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/810/958/#00-status) SEC content: no ##### [810-958-00-1](https://asc.understandingaccounting.org/asc/810/958/#810-958-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:02.909Z to 2026-09-10T01:33:02.909Z Record version: sha256:70a59ce1f8bd59d8dca4e0693ea2e8afd0958103713cc0282d7c78b2a0750344 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Bargain Purchase OptionSupersededAccounting Standards Update No. 2016-0202/25/2016
Bargain Renewal OptionSupersededAccounting Standards Update No. 2016-0202/25/2016
Conditional ContributionAddedAccounting Standards Update No. 2018-0806/21/2018
ContractAddedAccounting Standards Update No. 2016-0202/25/2016
ContributionAmendedAccounting Standards Update No. 2018-0806/21/2018
ContributionAmendedAccounting Standards Update No. 2010-0701/28/2010
Donor-Imposed ConditionAddedAccounting Standards Update No. 2018-0806/21/2018
Donor-Imposed RestrictionAmendedAccounting Standards Update No. 2016-1408/18/2016
Economic InterestAmendedAccounting Standards Update No. 2016-1408/18/2016
Fair Value (2nd def.)SupersededAccounting Standards Update No. 2012-0410/01/2012
Fair Value (3rd def.)AddedAccounting Standards Update No. 2012-0410/01/2012
Indirectly Related to the Leased PropertySupersededAccounting Standards Update No. 2016-0202/25/2016
Kick-Out Rights (Voting Interest Entity Definition)AddedAccounting Standards Update No. 2017-0201/12/2017
LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Lease TermAmendedAccounting Standards Update No. 2016-0202/25/2016
Legal EntityAddedAccounting Standards Update No. 2017-0201/12/2017
LesseeAddedAccounting Standards Update No. 2016-0202/25/2016
LessorAddedAccounting Standards Update No. 2016-0202/25/2016
Limited PartnershipAddedAccounting Standards Update No. 2017-0201/12/2017
Net Assets with Donor RestrictionsAddedAccounting Standards Update No. 2016-1408/18/2016
Net Assets without Donor RestrictionsAddedAccounting Standards Update No. 2016-1408/18/2016
Noncancelable Lease TermSupersededAccounting Standards Update No. 2016-0202/25/2016
Ordinary Course of Business (1st def.)AddedAccounting Standards Update No. 2017-0201/12/2017
Participating Rights (Voting Interest Entity Definition)AddedAccounting Standards Update No. 2017-0201/12/2017
Promise to GiveAddedAccounting Standards Update No. 2018-0806/21/2018
Protective Rights (Voting Interest Entity Definition)AddedAccounting Standards Update No. 2017-0201/12/2017
PenaltySupersededAccounting Standards Update No. 2016-0202/25/2016
Underlying AssetAddedAccounting Standards Update No. 2016-0202/25/2016
With CauseAddedAccounting Standards Update No. 2017-0201/12/2017
Without CauseAddedAccounting Standards Update No. 2017-0201/12/2017
958-810-05-1AmendedAccounting Standards Update No. 2017-0201/12/2017
958-810-05-1AmendedAccounting Standards Update No. 2010-0701/28/2010
958-810-15-3AmendedAccounting Standards Update No. 2010-0701/28/2010
958-810-15-4AmendedAccounting Standards Update No. 2017-0201/12/2017
958-810-15-4AmendedAccounting Standards Update No. 2016-0101/05/2016
958-810-15-4AmendedAccounting Standards Update No. 2015-0202/18/2015
958-810-15-4AmendedAccounting Standards Update No. 2012-0410/01/2012
958-810-15-4AmendedAccounting Standards Update No. 2010-0701/28/2010
958-810-25-2AmendedAccounting Standards Update No. 2015-0202/18/2015
958-810-25-3AmendedAccounting Standards Update No. 2015-1006/12/2015
958-810-25-10AmendedAccounting Standards Update No. 2016-0202/25/2016
958-810-25-11 through 25-29
AddedAccounting Standards Update No. 2017-0201/12/2017
958-810-45-1AmendedMaintenance Update 2017-06 (PDF)04/07/2017
958-810-45-1AmendedAccounting Standards Update No. 2016-1912/14/2016
958-810-45-1AddedAccounting Standards Update No. 2010-0701/28/2010
958-810-45-2AddedAccounting Standards Update No. 2017-0201/12/2017
958-810-50-4 through 50-6
AddedAccounting Standards Update No. 2010-0701/28/2010
958-810-50-5AmendedAccounting Standards Update No. 2016-1408/18/2016
958-810-50-5AmendedAccounting Standards Update No. 2015-0101/09/2015
958-810-55-3AmendedAccounting Standards Update No. 2012-0410/01/2012
958-810-55-4AmendedAccounting Standards Update No. 2017-0201/12/2017
958-810-55-4AmendedAccounting Standards Update No. 2016-0101/05/2016
958-810-55-4AmendedAccounting Standards Update No. 2015-0202/18/2015
958-810-55-4AmendedAccounting Standards Update No. 2012-0410/01/2012
958-810-55-7AmendedAccounting Standards Update No. 2016-0202/25/2016
958-810-55-14AmendedAccounting Standards Update No. 2016-0202/25/2016
958-810-55-16A through 55-16I
AddedAccounting Standards Update No. 2017-0201/12/2017
958-810-55-17 through 55-25
AddedAccounting Standards Update No. 2010-0701/28/2010
958-810-55-18AmendedAccounting Standards Update No. 2016-1408/18/2016
958-810-55-19AmendedAccounting Standards Update No. 2016-1408/18/2016
958-810-55-21 through 55-25
AmendedAccounting Standards Update No. 2016-1408/18/2016
958-810-55-21AmendedAccounting Standards Update No. 2016-0101/05/2016
958-810-55-24AmendedAccounting Standards Update No. 2016-0101/05/2016
958-810-55-25AmendedAccounting Standards Update No. 2016-0101/05/2016
958-810-55-26 through 55-32
AddedAccounting Standards Update No. 2017-0201/12/2017
958-810-60-3AmendedAccounting Standards Update No. 2015-0202/18/2015
958-810-65-2AddedAccounting Standards Update No. 2017-0201/12/2017
Source downloaded (UTC): 2026-09-10T01:33:05.595Z to 2026-09-10T01:33:05.595Z Record version: sha256:09e2f15995ba7bfab91c1acbe50743064533603a62db69ce3a024d4f52537ac9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-958-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/810/958/#05-overview-and-background) SEC content: no ##### [810-958-05-1](https://asc.understandingaccounting.org/asc/810/958/#810-958-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:05.595Z to 2026-09-10T01:33:05.595Z Record version: sha256:79c2025d2362bd75cdbf4a6f9f983189ba187c99c1ddf8d324d1ca1cbce33c24 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on the following: 1. a Reporting relationships between a [not-for-profit entity](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFP) and another NFP that potentially result in [consolidation](https://asc.understandingaccounting.org/glossary/c/#consolidation "The presentation of a single set of amounts for an entire reporting entity. Consolidation requires elimination of intra-entity transactions and balances.") 2. b Reporting relationships with special-purpose entity lessors (either for-profit entities or NFPs) 3. c Reporting a noncontrolling interest in an acquiree 4. d Reporting relationships between an NFP and a for-profit entity that is other than a [limited partnership](https://asc.understandingaccounting.org/glossary/l/#limited-partnership "An association in which one or more general partners have unlimited liability and one or more partners have limited liability. A limited partnership is usually managed by the general partner or partners, subject to limitations, if any, imposed by the partnership agreement.") or similar [legal entity](https://asc.understandingaccounting.org/glossary/l/#legal-entity "Any legal structure used to conduct activities or to hold assets. Some examples of such structures are corporations, partnerships, limited liability companies, grantor trusts, and other trusts.") (incremental guidance only). 5. e Reporting relationships between an NFP that is a general partner or a limited partner and a for-profit limited partnership or similar legal entity. ##### [810-958-05-2](https://asc.understandingaccounting.org/asc/810/958/#810-958-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:05.595Z to 2026-09-10T01:33:05.595Z Record version: sha256:84d82b098c07606153a332fad30b437db21872d67acf0b737a469f61a8c0974d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An NFP may be related to one or more other NFPs in numerous ways, including any of the following: 1. a Ownership 2. b [Control](https://asc.understandingaccounting.org/glossary/c/#control "The direct or indirect ability to determine the direction of management and policies through ownership, contract, or otherwise.") 3. c [Economic interest](https://asc.understandingaccounting.org/glossary/e/#economic-interest "A not-for-profit entity's (NFP's) interest in another entity that exists if any of the following criteria are met: The other entity holds or utilizes significant resources that must be used for the purposes of the NFP, either directly or indirectly by producing income or providing services. The NFP is responsible for the liabilities of the other entity. See paragraph 958-810-55-6 for examples of economic interests."). ##### [810-958-05-3](https://asc.understandingaccounting.org/asc/810/958/#810-958-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:05.595Z to 2026-09-10T01:33:05.595Z Record version: sha256:d409400ea134d61e442f0fdf6bdc6bc2da274cea419a3b4c30b7f079f17684dc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because NFPs may exist in various legal forms, ownership of NFPs may be evidenced in various ways. Examples include: 1. a Corporations issuing stock 2. b Corporations issuing ownership certificates 3. c Membership corporations issuing membership certificates 4. d Joint ventures 5. e Partnerships. A parent corporation typically owns stock in a for-profit entity, whereas a sole corporate member holds (all) membership rights in an NFP. ##### [810-958-05-4](https://asc.understandingaccounting.org/asc/810/958/#810-958-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:05.595Z to 2026-09-10T01:33:05.595Z Record version: sha256:c82eec18a3b15b6c40444ab54130d061909656e8b14eb88c153f77868ecc5470 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The nature of the relationship between the entities determines the following: 1. a Whether the financial statements of an NFP and those of another NFP should be consolidated 2. b Whether the other NFP should be reported using a method similar to the equity method (see Subtopic 958-20) 3. c The extent of the disclosure that should be required, if any. ##### [810-958-05-5](https://asc.understandingaccounting.org/asc/810/958/#810-958-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:05.595Z to 2026-09-10T01:33:05.595Z Record version: sha256:e7267341e963b911c2d8feec98c1981e612d78345101fd17b8700c7e81979b07 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). Source downloaded (UTC): 2026-09-10T01:33:08.211Z to 2026-09-10T01:33:08.211Z Record version: sha256:a19748a6da6177541a622358a18f668de484734bbf8b991ce33e658a8b3537b2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-958-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/810/958/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [810-958-15-1](https://asc.understandingaccounting.org/asc/810/958/#810-958-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:08.211Z to 2026-09-10T01:33:08.211Z Record version: sha256:6f85eebf9f15f443a80cc25f86628995424d96c0d2aebdc725d6ac11759ced0d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 958-10-15, with specific exceptions noted below. ##### [810-958-15-2](https://asc.understandingaccounting.org/asc/810/958/#810-958-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:08.211Z to 2026-09-10T01:33:08.211Z Record version: sha256:e528759883106b7860226f197918131413f620fff9729ea2692b6d3385a85764 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). #### Other Considerations ##### [810-958-15-3](https://asc.understandingaccounting.org/asc/810/958/#810-958-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:08.211Z to 2026-09-10T01:33:08.211Z Record version: sha256:3aa0c0e84a066de934c85c8e79407ae4331b58faf58ec356239d31d04f864f2c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic does not provide guidance on the following subjects: 1. a How to prepare consolidated financial statements, other than to provide guidance on the presentation of noncontrolling interests 2. b Commonly controlled [not-for-profit entities](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFPs) or [combined financial statements](https://asc.understandingaccounting.org/glossary/c/#combined-financial-statements "The financial statements of a combined group of commonly controlled entities or commonly managed entities presented as those of a single economic entity. The combined group does not include the parent.") of commonly controlled NFPs, which may be presented, in certain circumstances, in conformity with the guidance in paragraph [810-10-55-1B](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-1B) 3. c Parent-entity-only or subsidiary-entity-only financial statements (see paragraph [810-10-45-11](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-11) if parent-entity financial statements are needed) 4. d All the conceptual issues underlying the reporting of relationships not evidenced by ownership. ##### [810-958-15-4](https://asc.understandingaccounting.org/asc/810/958/#810-958-15-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:08.211Z to 2026-09-10T01:33:08.211Z Record version: sha256:ca0cd817fc2be86b3924a9dfc1cdd6070f019ea8b91e798e5ea031c509d8cd07 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Additional guidance for reporting relationships between NFPs and for-profit entities resides in the following locations in the Codification: 1. a An NFP with a controlling financial interest through direct or indirect ownership of a majority voting interest in a for-profit entity that is other than a [limited partnership](https://asc.understandingaccounting.org/glossary/l/#limited-partnership "An association in which one or more general partners have unlimited liability and one or more partners have limited liability. A limited partnership is usually managed by the general partner or partners, subject to limitations, if any, imposed by the partnership agreement.") or similar [legal entity](https://asc.understandingaccounting.org/glossary/l/#legal-entity "Any legal structure used to conduct activities or to hold assets. Some examples of such structures are corporations, partnerships, limited liability companies, grantor trusts, and other trusts.")shall apply the guidance in the General Subsections of Subtopic 810-10. However, in accordance with paragraph [810-10-15-17](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17), NFPs are not subject to the Variable Interest Entities Subsections of that Subtopic. 2. b An NFP that is a general partner or a limited partner of a for-profit limited partnership or a similar legal entity (such as a limited liability company that has governing provisions that are the functional equivalent of a limited partnership) shall apply the guidance in paragraphs [958-810-25-11 through 25-29](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-11) and [958-810-55-16A through 55-16I](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-16A) . However, the guidance in those paragraphs does not apply to the following: 1. 1 A general partner or a limited partner that reports its partnership interest at [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") in accordance with (e) 2. 2 Entities in industries, such as the construction or extractive industries, in which it is appropriate for a general partner to use the pro rata method of consolidation for its investment in a limited partnership (see paragraph [810-10-45-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-14)). 3. c An NFP that owns 50 percent or less of the voting stock in a for-profit entity shall apply the guidance in Subtopic 323-10 unless the investment is measured at fair value in accordance with applicable GAAP, including the guidance described in (e). If the NFP is unable to exercise significant influence, the NFP shall apply the guidance for equity securities in Topic 321. 4. d An NFP with a more than minor noncontrolling interest in a for-profit real estate partnership, limited liability company, or similar legal entity shall report its noncontrolling interests in such entities using the equity method in accordance with the guidance in Subtopic 970-323 unless that interest is reported at fair value in accordance with applicable GAAP, including the guidance described in (e). An NFP shall apply the guidance in paragraph [970-810-25-1](https://asc.understandingaccounting.org/asc/810/970/#810-970-25-1) to determine whether its interests in a general partnership are controlling financial interests or noncontrolling interests. An NFP shall apply the guidance in paragraphs [958-810-25-11 through 25-29](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-11) and [958-810-55-16A through 55-16I](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-16A) to determine whether its interests in a for-profit limited partnership, limited liability company, or similar legal entity are controlling financial interests or noncontrolling interests. An NFP shall apply the guidance in paragraph [323-30-35-3](https://asc.understandingaccounting.org/asc/323/30/#323-30-35-3) to determine whether a limited liability company should be viewed as similar to a partnership, as opposed to a corporation, for purposes of determining whether noncontrolling interests in a limited liability company or a similar legal entity should be accounted for in accordance with Subtopic 970-323 or Subtopic 323-10. 5. e An NFP that is not within the scope of Topic 954 on health care entities may elect to report the investments described in (b) through (d) and paragraph [958-325-15-2](https://asc.understandingaccounting.org/asc/325/958/#325-958-15-2) at fair value, with changes in fair value reported in the statement of activities, provided that all such investments are measured at fair value. Source downloaded (UTC): 2026-09-10T01:33:14.364Z to 2026-09-10T01:33:14.364Z Record version: sha256:3b513cc3f86fb8df2f00568ddcc2571d3099f71bc115e307b65649c4116bc960 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-958-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/810/958/#25-recognition) SEC content: no ##### [810-958-25-1](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:14.364Z to 2026-09-10T01:33:14.364Z Record version: sha256:2dc35450b974cee3284140edb3d992d2fe0226d85fd76c7f2b21906caf531c3d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A relationship with another [not-for-profit entity](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFP) can take any one of the following forms, which determines the appropriate reporting: 1. a A controlling financial interest through direct or indirect ownership of a majority voting interest or sole corporate membership in the other NFP (see the following paragraph) 2. b [Subparagraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). 3. c [Control](https://asc.understandingaccounting.org/glossary/c/#control "The direct or indirect ability to determine the direction of management and policies through ownership, contract, or otherwise.") of a related but separate NFP through a majority voting interest in the board of that NFP by means other than ownership or sole corporate membership and an [economic interest](https://asc.understandingaccounting.org/glossary/e/#economic-interest "A not-for-profit entity's (NFP's) interest in another entity that exists if any of the following criteria are met: The other entity holds or utilizes significant resources that must be used for the purposes of the NFP, either directly or indirectly by producing income or providing services. The NFP is responsible for the liabilities of the other entity. See paragraph 958-810-55-6 for examples of economic interests.") in that other NFP (see paragraph [958-810-25-3](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-3)) 4. d An economic interest in the other NFP combined with control through means other than those listed in (a) through (c) (see paragraph [958-810-25-4](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-4)) 5. e Either an economic interest in the other NFP or control of the other NFP, but not both (see paragraph [958-810-25-5](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-5)). #### Controlling Financial Interest via Majority Voting Interest or Sole Corporate Membership ##### [810-958-25-2](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:14.364Z to 2026-09-10T01:33:14.364Z Record version: sha256:c7a01752f529387d1f0519c883987353bf9b4f570a8c9124cc2e628574b53ec8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An NFP with a controlling financial interest in another NFP through direct or indirect ownership of a majority voting interest or sole corporate membership in that other NFP shall consolidate that other NFP, unless control does not rest with the majority owner or sole corporate member (for example, if the subsidiary is in legal reorganization or bankruptcy), in which case [consolidation](https://asc.understandingaccounting.org/glossary/c/#consolidation "The presentation of a single set of amounts for an entire reporting entity. Consolidation requires elimination of intra-entity transactions and balances.") is prohibited, as discussed in paragraph [810-10-15-10](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-10). Sole corporate membership in an NFP, like ownership of a majority voting interest in a for-profit entity, shall be considered a controlling financial interest, unless control does not rest with the sole corporate member (for instance, if the other \[membership\] entity is in bankruptcy or if other legal or contractual limitations are so severe that control does not rest with the sole corporate member). ##### [810-958-25-2A](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-2A) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:14.364Z to 2026-09-10T01:33:14.364Z Record version: sha256:43f2956500e654fa78a89e6dee5e91b4ad22ecf350ded53164b6633f370f928c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In some situations, certain actions require approval by a supermajority vote of the board. Such voting requirements might overcome the presumption of control by the owner or holder of a majority voting interest. For related implementation guidance, see paragraph [958-810-55-4A](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-4A). #### Majority Voting Interest in the Board ##### [810-958-25-3](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:14.364Z to 2026-09-10T01:33:14.364Z Record version: sha256:292f84d258d5c9f6e99b468705c212fd6962323411742feb2a95bb7bc1714480 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In the case of control of a related but separate NFP through a majority voting interest in the board of the other NFP by means other than ownership or sole corporate membership and an economic interest in that other NFP, consolidation is required, unless control does not rest with the holder of the majority voting interest, in which case consolidation is prohibited. An NFP has a majority voting interest in the board of another entity if it has the direct or indirect ability to appoint individuals that together constitute a majority of the votes of the fully constituted board (that is, including any vacant board positions). Those individuals are not limited to the NFP's own board members, employees, or officers. For implementation guidance on a majority voting interest in the board of another entity, see paragraph [958-810-55-5](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-5). #### Control by Other Means ##### [810-958-25-4](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:14.364Z to 2026-09-10T01:33:14.364Z Record version: sha256:d4afeb519f24069ef7ca93cdc11d4c16a1f4abbfd36213956a82c650419e6315 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Control of a related but separate NFP in which the reporting entity has an economic interest may take forms other than majority ownership interest, sole corporate membership, or majority voting interest in the board of the other entity; for example, control may be through contract or affiliation agreement. In circumstances such as these, consolidation is permitted but not required. Consolidation is encouraged if both of the following criteria are met: 1. a The reporting entity controls a separate NFP in which it has an economic interest and that control is not control through either of the following means: 1. 1 A controlling financial interest in the other NFP through direct or indirect ownership of a majority voting interest 2. 2 A majority voting interest in the board of the other NFP. 2. b Consolidation would be meaningful. #### Control or an Economic Interest, but Not Both ##### [810-958-25-5](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:14.364Z to 2026-09-10T01:33:14.364Z Record version: sha256:543a9979eef0b0289487bef7ac243b75e5a78d5f3ad0d2cfe7ddd2ba37b758c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The existence of control or an economic interest, but not both, precludes consolidation. #### Less than a Complete Interest in the Subsidiary NFP ##### [810-958-25-6](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:14.364Z to 2026-09-10T01:33:14.364Z Record version: sha256:fe56d1891761fe5fcefeab2f3adbfcb46a93060f27fd3a1fd5996c1042314768 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An interest by an NFP in another NFP may be less than a complete interest. For example, an NFP may appoint 80 percent of the board of the other NFP. For NFPs other than those within the scope of Topic 954, if the conditions for consolidation in paragraphs [958-810-25-2](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-2), [958-810-25-3](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-3), or [958-810-25-4](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-4) are met, the basis of that consolidation would not reflect a [noncontrolling interest](https://asc.understandingaccounting.org/glossary/n/#noncontrolling-interest "The portion of equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. A noncontrolling interest is sometimes called a minority interest.") for the portion of the board that the reporting entity does not control, because there is no ownership interest other than the interest of the reporting entity. #### Revenue Sharing and Other Agreements ##### [810-958-25-7](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:14.364Z to 2026-09-10T01:33:14.364Z Record version: sha256:5fe60504bdbce6c914f5f21b33056a9107321d593b90fb29b2cb1b475d1439bf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some NFPs may enter into agreements with other entities, such as sharing revenue, resulting in liabilities to those other entities. In such circumstances, those liabilities shall be reported. If NFPs agree to share revenue from fundraising campaigns, the appropriate accounting depends on the relationship between the NFPs. See Subtopic 958-20 for agreements in which an NFP agrees to raise or hold [contributions](https://asc.understandingaccounting.org/glossary/c/#contribution "An unconditional transfer of cash or other assets, as well as unconditional promises to give, to an entity or a reduction, settlement, or cancellation of its liabilities in a voluntary nonreciprocal transfer by another entity acting other than as an owner. Those characteristics distinguish contributions from:Exchange transactions, which are reciprocal transfers in which each party receives and sacrifices approximately commensurate valueInvestments by owners and distributions to owners, which are nonreciprocal transfers between an entity and its ownersOther nonreciprocal transfers, such as impositions of taxes or legal judgments, fines, and thefts, which are not voluntary transfers. In a contribution transaction, the resource provider often receives value indirectly by providing a societal benefit although that benefit is not considered to be of commensurate value. In an exchange transaction, the potential public benefits are secondary to the potential direct benefits to the resource provider. The term contribution revenue is used to apply to transactions that are part of the entity's ongoing major or central activities (revenues), or are peripheral or incidental to the entity (gains). See also Inherent Contribution and Conditional Contribution.") for a financially interrelated entity. See paragraph [958-605-25-24](https://asc.understandingaccounting.org/asc/605/958/#605-958-25-24) for agreements in which an NFP agrees to raise or hold contributions for another NFP as its [agent](https://asc.understandingaccounting.org/glossary/a/#agent "An entity that acts for and on behalf of another. Although the term agency has a legal definition, the term is used broadly to encompass not only legal agency, but also the relationships described in Topic 958. A recipient entity acts as an agent for and on behalf of a donor if it receives assets from the donor and agrees to use those assets on behalf of or transfer those assets, the return on investment of those assets, or both to a specified beneficiary. A recipient entity acts as an agent for and on behalf of a beneficiary if it agrees to solicit assets from potential donors specifically for the beneficiary's use and to distribute those assets to the beneficiary. A recipient entity also acts as an agent if a beneficiary can compel the recipient entity to make distributions to it or on its behalf."). #### Special-Purpose-Entity Lessors ##### [810-958-25-8](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:14.364Z to 2026-09-10T01:33:14.364Z Record version: sha256:586f9d90bc5fb905737d14463d67f9c4366b6d2bb98dd2afe47c9df18e722ea5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Notwithstanding the guidance in this Subtopic, an NFP that is engaged in leasing transactions with a special-purpose-entity (SPE) lessor shall consider whether it should consolidate such lessor. Specifically, such an NFP shall consolidate an SPE lessor if all of the following conditions exist: 1. a Substantially all of the activities of the SPE involve assets that are to be leased to a single lessee. 2. b The expected substantive residual risks and substantially all the residual rewards of the leased asset(s) and the obligation imposed by the underlying debt of the SPE reside directly or indirectly with the lessee through means such as any of the following: 1. 1 The lease agreement 2. 2 A residual value guarantee through, for example, the assumption of first-dollar-of-loss provisions 3. 3 A guarantee of the SPE's debt 4. 4 An option granting the lessee a right to do either of the following: 1. i To purchase the leased asset at a fixed price or at a defined price other than fair value determined at the date of exercise 2. ii To receive any of the lessor's sales proceeds in excess of a stipulated amount. 3. c The owner (or owners) of record of the SPE has not made an initial substantive residual equity capital investment that is at risk during the entire [lease term](https://asc.understandingaccounting.org/glossary/l/#lease-term "The noncancellable period for which a lessee has the right to use an underlying asset, together with all of the following: Periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option Periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option Periods covered by an option to extend (or not to terminate) the lease in which exercise of the option is controlled by the lessor."). This criterion shall be considered met if the majority owner (or owners) of the lessor is not an independent third party, regardless of the level of capital investment. ##### [810-958-25-9](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:14.364Z to 2026-09-10T01:33:14.364Z Record version: sha256:606f3aa3a4351a2442fdca79bde28ffddd4c86701bf40ea70186d746634e8cb5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To satisfy the at-risk requirement in item (c) in the preceding paragraph, an initial substantive residual equity capital investment shall meet all of the following conditions: 1. a It represents an equity interest in legal form. 2. b It is subordinate to all debt interests. 3. c It represents the residual equity interest during the entire lease term. ##### [810-958-25-10](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:14.364Z to 2026-09-10T01:33:14.364Z Record version: sha256:cdc52380fc24cca1b164ad1a559b6e3e5e667a3ddd794b7fd57c81737f6cb0e2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If all of the conditions in paragraph [958-810-25-8](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-8) exist, the assets, liabilities, results of operations, and cash flows of the SPE shall be consolidated in the lessee's financial statements. This conclusion shall be applied to SPEs that are established for both the construction and subsequent lease of an asset for which the lease would meet all of the conditions in paragraph [958-810-25-8](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-8). In those cases, the consolidation by the lessee shall begin at [lease inception](https://asc.understandingaccounting.org/glossary/l/#lease-inception "The date of the lease agreement or commitment, if earlier. For purposes of this definition, a commitment shall be in writing, signed by the parties in interest to the transaction, and shall specifically set forth the principal provisions of the transaction. If any of the principal provisions are yet to be negotiated, such a preliminary agreement or commitment does not qualify for purposes of this definition.") rather than the beginning of the lease term. [958-810-55-7 through 55-16](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-7) #### Control of Limited Partnerships and Similar Legal Entities ##### [810-958-25-11](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:14.364Z to 2026-09-10T01:33:14.364Z Record version: sha256:35a44f3ed1805f07b698d8cc31cd6ab3cd81ca877d390c0b67509efeb1b7b9e7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this paragraph and paragraphs [958-810-25-12 through 25-29](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-12) and [958-810-55-16A through 55-16I](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-16A) addresses the potential [consolidation](https://asc.understandingaccounting.org/glossary/c/#consolidation "The presentation of a single set of amounts for an entire reporting entity. Consolidation requires elimination of intra-entity transactions and balances.") of [limited partnerships](https://asc.understandingaccounting.org/glossary/l/#limited-partnership "An association in which one or more general partners have unlimited liability and one or more partners have limited liability. A limited partnership is usually managed by the general partner or partners, subject to limitations, if any, imposed by the partnership agreement.") and similar [legal entities](https://asc.understandingaccounting.org/glossary/l/#legal-entity "Any legal structure used to conduct activities or to hold assets. Some examples of such structures are corporations, partnerships, limited liability companies, grantor trusts, and other trusts."). A similar legal entity is an entity (such as a limited liability company) that has governing provisions that are the functional equivalent of a limited partnership. In those entities, a managing member is the functional equivalent of a general partner, and a nonmanaging member is the functional equivalent of a limited partner. Throughout those paragraphs, any reference to a limited partnership includes limited partnerships and similar legal entities. ##### [810-958-25-12](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:14.364Z to 2026-09-10T01:33:14.364Z Record version: sha256:daf4c4531d9272d83eb612f81ed9c8236a4ad275ce50901090d89f423c7e979d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The general partners in a [limited partnership](https://asc.understandingaccounting.org/glossary/l/#limited-partnership "An association in which one or more general partners have unlimited liability and one or more partners have limited liability. A limited partnership is usually managed by the general partner or partners, subject to limitations, if any, imposed by the partnership agreement.") are presumed to control that limited partnership regardless of the extent of the general partners' ownership interest in the limited partnership. ##### [810-958-25-13](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:14.364Z to 2026-09-10T01:33:14.364Z Record version: sha256:b6718d903fda34e4c3bb47be7ecf4d23ad268d2350f62b0c7336a50c3179ee63 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a limited partnership has multiple general partners, the determination of which, if any, general partner within the group controls and, therefore, shall consolidate the limited partnership is based on an analysis of the relevant facts and circumstances. In situations involving multiple general partners, entities under common control are considered to be a single general partner for purposes of applying the guidance in paragraphs [958-810-25-11 through 25-29](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-11) and [958-810-55-16A through 55-16I](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-16A) . ##### [810-958-25-14](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:14.364Z to 2026-09-10T01:33:14.364Z Record version: sha256:c3acbbb3c9451de1e2becd558feacd101aa5e8c3c34516909bb450633c1432d0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The assessment of whether the rights of the limited partners overcome the presumption of control by the general partners is a matter of judgment that depends on facts and circumstances. The general partners do not control the limited partnership if the limited partners have either of the following: 1. a Substantive [kick-out rights](https://asc.understandingaccounting.org/glossary/k/#kick-out-rights-voting-interest-entity-definition "The rights underlying the limited partner's or partners' ability to dissolve (liquidate) the limited partnership or otherwise remove the general partners without cause.") 2. b Substantive [participating rights](https://asc.understandingaccounting.org/glossary/p/#participating-rights-voting-interest-entity-definition "Participating rights allow the limited partners or noncontrolling shareholders to block or participate in certain significant financial and operating decisions of the limited partnership or corporation that are made in the ordinary course of business. Participating rights do not require the holders of such rights to have the ability to initiate actions."). ##### [810-958-25-15](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:14.364Z to 2026-09-10T01:33:14.364Z Record version: sha256:e8243b71edfa1992469eb454414a7d2fa3548f56a7382d023ac2c1d80cfe2588 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the limited partners have substantive kick-out rights or substantive participating rights, the presumption of control by the general partners is overcome and each of the general partners shall account for its investment in the limited partnership using the equity method of accounting. Topic 323 provides guidance on the equity method of accounting. ##### [810-958-25-16](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:14.364Z to 2026-09-10T01:33:14.364Z Record version: sha256:71271ef377145ee08e10f0218ccae730cb647310252588216771943ad4a0be47 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If one limited partner directly or indirectly owns more than 50 percent of a limited partnership's kick-out rights through voting interests, then that limited partner shall be deemed to have a controlling financial interest in the limited partnership and shall consolidate the limited partnership. However, if noncontrolling limited partners have substantive participating rights, then the limited partner with a majority of kick-out rights through voting interests does not have a controlling financial interest. ##### [810-958-25-17](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:14.364Z to 2026-09-10T01:33:14.364Z Record version: sha256:fe0df32d45d1445a95ef6f2a35899af232448c3a7266f528401d32b5c16da23f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in paragraphs [958-810-25-19 through 25-29](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-19) shall be considered in evaluating whether rights held by the limited partners overcome the presumption of control by the general partners. ##### [810-958-25-18](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:14.364Z to 2026-09-10T01:33:14.364Z Record version: sha256:fe49cac01ff5bf1e1b5423f40cc94bae4fdd4f6898c5069ff07564808884e768 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Limited partners' rights and their effect on whether the presumption of control by the general partners is overcome and on whether one limited partner has a controlling financial interest in a limited partnership shall be assessed when an investor first becomes a partner and shall be reassessed at each reporting period thereafter for which financial statements of the partner(s) are prepared. ##### [810-958-25-19](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:14.364Z to 2026-09-10T01:33:14.364Z Record version: sha256:abd45a38e5a6a9331e2d48a0149f52eddcdca43e82a863673ec9c027d2aaab3d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All relevant facts and circumstances shall be considered in determining whether kick-out rights are substantive. Substantive kick-out rights must have both of the following characteristics: 1. a The kick-out rights can be exercised by a single limited partner or a vote of a simple majority (see Example 2 in paragraph [958-810-55-26](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-26)) or a lower percentage of the limited partners' voting interests held by parties other than the general partners, entities under common control with the general partners or a general partner, and other parties acting on behalf of the general partners or a general partner. A kick-out right that contractually requires a vote in excess of a simple majority (such as a supermajority) of the limited partners' voting interests to remove the general partners may still be substantive if the general partners could be removed in every possible voting scenario in which a simple majority of the limited partners' voting interests vote for removal. That is, there is no combination of the limited partners' voting interests that represents at least a simple majority of the limited partners' voting interests that cannot remove the general partners (see Example 2, Case D in paragraph [958-810-55-30](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-30)). All relevant facts and circumstances shall be considered in assessing whether other parties, including, but not limited to, those defined as related parties in Topic 850, may be acting on behalf of the general partners in exercising their voting rights as limited partners. Similarly, in assessing whether a single limited partner has the ability to remove the general partners, consideration shall be given to whether other parties, including, but not limited to, those defined as related parties in Topic 850, may be acting with the limited partner in exercising their kick-out rights. 2. b The limited partners holding the kick-out rights must have the ability to exercise those rights if they choose to do so; that is, there are no significant barriers to the exercise of the rights. Barriers include, but are not limited to, the following: 1. 1 Kick-out rights subject to conditions that make it unlikely they will be exercisable, for example, conditions that narrowly limit the timing of the exercise 2. 2 Financial penalties or operational barriers associated with dissolving (liquidating) the limited partnership or replacing the general partners that would act as a significant disincentive for dissolution (liquidation) or removal 3. 3 The absence of an adequate number of qualified replacement general partners or the lack of adequate compensation to attract a qualified replacement 4. 4 The absence of an explicit, reasonable mechanism in the limited partnership agreement or in the applicable laws or regulations by which the limited partners holding the rights can call for and conduct a vote to exercise those rights 5. 5 The inability of the limited partners holding the rights to obtain the information necessary to exercise them. ##### [810-958-25-20](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-20) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:14.364Z to 2026-09-10T01:33:14.364Z Record version: sha256:7f1f7eb0e7785b6db70c9dabc7cad6c2d5beddc7d98362c300f93f5336a0d1f7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For purposes of applying the guidance in paragraph [958-810-25-19](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-19), the limited partners' unilateral right to withdraw from the partnership in whole or in part (withdrawal right) that does not require dissolution or liquidation of the entire limited partnership shall not be deemed a kick-out right. The requirement to dissolve or liquidate the entire limited partnership upon the withdrawal of a limited partner or partners does not have to be contractual for a withdrawal right to be considered as a potential kick-out right. ##### [810-958-25-21](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-21) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:14.364Z to 2026-09-10T01:33:14.364Z Record version: sha256:8b8a5b2e82cb1f3ec2c2b07965a1e78985f2290b1fdbba5ca53d0719f5627741 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Participating rights are different from [protective rights](https://asc.understandingaccounting.org/glossary/p/#protective-rights-voting-interest-entity-definition "Rights that are only protective in nature and that do not allow the limited partners or noncontrolling shareholders to participate in significant financial and operating decisions of the limited partnership or corporation that are made in the ordinary course of business."). Limited partners' rights that are only protective in nature do not overcome the presumption that the general partners control the limited partnership. Limited partners' rights, individually or in the aggregate, that provide the limited partners with the right to effectively participate in certain significant financial and operating decisions that are made in the ordinary course of the limited partnership's business, while being protective of the limited partners' investment, overcome the presumption that the general partners control the limited partnership. ##### [810-958-25-22](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-22) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:14.364Z to 2026-09-10T01:33:14.364Z Record version: sha256:febcab90efc46922a8242ec2188f2c491c032e80169bb9f3809dff0eacb89181 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Limited partners' rights (whether granted by contract or by law) that allow limited partners to effectively participate in the following actions of the limited partnership shall be considered substantive participating rights and, therefore, overcome the presumption that the general partners control the limited partnership: 1. a Selecting, terminating, and setting the compensation of management responsible for implementing the limited partnership's policies and procedures 2. b Establishing operating and capital decisions of the limited partnership, including budgets, in the [ordinary course of business](https://asc.understandingaccounting.org/glossary/o/#ordinary-course-of-business "Decisions about matters of a type consistent with those normally expected to be addressed in directing and carrying out current business activities, regardless of whether the events or transactions that would necessitate such decisions are expected to occur in the near term. However, it must be at least reasonably possible that those events or transactions that would necessitate such decisions will occur. The ordinary course of business does not include self-dealing transactions.") These rights are considered illustrative of substantive participating rights but are not necessarily an all-inclusive list. ##### [810-958-25-23](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-23) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:14.364Z to 2026-09-10T01:33:14.364Z Record version: sha256:e4af2eb57e18ee27d6ac520bac7d391cea287c452ac5f7f399fbaa0d2c601a7a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The rights described in paragraph [958-810-25-22](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-22) are participating rights because, in the aggregate, they allow the limited partners to effectively participate in certain significant financial and operating decisions that occur as part of the ordinary course of the limited partnership's business and are significant factors in directing and carrying out the activities of the limited partnership. ##### [810-958-25-24](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-24) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:14.364Z to 2026-09-10T01:33:14.364Z Record version: sha256:cd922c525fef5ec8461ae8a2b832d94b8a7d9be445c12ca2a088cd7b8fede1f2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Rights held by the limited partners to remove the general partners from the partnership shall be evaluated as kick-out rights in accordance with paragraph [958-810-25-19](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-19). Rights of the limited partners to participate in the termination of management (for example, management is outsourced to a party other than the general partner) or the individual members of management of the limited partnership may be substantive participating rights. ##### [810-958-25-25](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-25) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:14.364Z to 2026-09-10T01:33:14.364Z Record version: sha256:62bc23541d2da9ad873a4aef99f6f97946f43ace6ea57b40d7ec4eacce15cdb6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Individual rights, such as the right to veto the termination of management responsible for implementing the limited partnership's policies and procedures (if management is outsourced—via contract with a third party—by the general partners), shall be assessed based on the facts and circumstances to determine if they are substantive participating rights in and of themselves. The likelihood that the veto right will be exercised by the limited partners shall not be considered when assessing whether a limited partner's right is a substantive participating right. ##### [810-958-25-26](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-26) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:14.364Z to 2026-09-10T01:33:14.364Z Record version: sha256:823317acf477f5665ee7b31a002c876690f7df4ab078d413fc5061582f948fb1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Limited partners' rights that appear to be participating rights but that by themselves are not substantive do not overcome the presumption of control by the general partners in the limited partnership. ##### [810-958-25-27](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-27) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:14.364Z to 2026-09-10T01:33:14.364Z Record version: sha256:72cdcf0a743f7c623cc22e746dfc582bea31c4d0f511032dd9fcb1b258142f6f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following factors shall be considered in evaluating whether limited partners' participating rights are substantive such that the rights provide for effective participation in certain significant decisions related to the limited partnership's ordinary course of business: 1. a The limited partnership agreement shall be considered to determine at what level decisions are made (that is, by the general partners or by the limited partnership as a whole). Also, the rights at each level shall be considered. In all situations, any matters that can be put to a vote of the limited partnership shall be considered to determine whether the limited partners, individually or in the aggregate, have substantive participating rights by virtue of their ability to vote on matters submitted to a vote of the limited partnership. Determining whether matters that can be put to a vote of the limited partners, or the vote of the limited partnership as a whole, are substantive shall be based on a consideration of all relevant facts and circumstances. 2. b Relationships between the general partners and the limited partners (other than investment in the common limited partnership) that are of a related-party nature, as defined in Topic 850, shall be considered in determining whether the participating rights of the limited partners are substantive. For example, if the limited partner in a limited partnership is a member of the immediate family of the general partners of the limited partnership, then the rights of the limited partner likely would not overcome the presumption of control by the general partners. 3. c Certain limited partners' rights may deal with operating or capital decisions that are not significant to the ordinary course of business of the limited partnership. Limited partners' rights related to items that are not considered significant for directing and carrying out the activities of the limited partnership's ordinary course of business are not substantive participating rights and do not overcome the presumption of control by the general partners. Examples of such limited partners' rights include the following decisions: 1. 1 Location of the limited partnership's headquarters 2. 2 Name of the limited partnership 3. 3 Selection of auditors 4. 4 Selection of accounting principles for purposes of separate reporting of the limited partnership's operations. 4. d Certain limited partners' rights may provide for the limited partners to participate in certain significant financial and operating decisions that are made in the ordinary course of business; however, the existence of such limited partners' rights shall not overcome the presumption that the general partners have control if it is remote that the event or transaction that requires the limited partners' approval will occur. 5. e General partners who have a contractual right to buy out the interest of the limited partners in the limited partnership for fair value or less shall consider the feasibility of exercising that contractual right when determining if the participating rights of the limited partners are substantive. If such a buyout is prudent, feasible, and substantially within the control of the general partners, the general partners' contractual right to buy out the limited partners demonstrates that the participating right of the limited partners is not a substantive right. The existence of such call options, for purposes of this Subtopic, negates the participating rights of the limited partners to approve or veto an action of the general partners rather than creates an additional ownership interest for the general partners. It would not be prudent, feasible, and substantially within the control of the general partners to buy out the limited partners if, for example, either of the following conditions exists: 1. 1 The limited partners control technology that is critical to the limited partnership. 2. 2 The limited partners are the principal source of funding for the limited partnership. ##### [810-958-25-28](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-28) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:14.364Z to 2026-09-10T01:33:14.364Z Record version: sha256:dec1632799bd64549f2deee995f97ec2755a0f32d4e0ea7eaf342f7eb596e57b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Limited partners' rights (whether granted by contract or by law) that allow the limited partners to block the following limited partnership's actions are considered protective rights and do not overcome the presumption of control by the general partners: 1. a Amendments to the limited partnership agreement 2. b Pricing on transactions between the general partners and the limited partnership and related self-dealing transactions 3. c Liquidation of the limited partnership in the context of Topic 852 on reorganizations initiated by the general partners or a decision to cause the limited partnership to enter bankruptcy or other receivership 4. d Acquisitions and dispositions of assets that are not expected to be undertaken in the ordinary course of business (Limited partners' rights relating to acquisitions and dispositions that are expected to be made in the ordinary course of the limited partnership's business are participating rights. Determining whether such rights are substantive requires judgment in light of the relevant facts and circumstances.) 5. e Issuance or repurchase of limited partnership interests. These are illustrative of some, but not all, of the protective rights that often are provided to limited partners. ##### [810-958-25-29](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-29) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:14.364Z to 2026-09-10T01:33:14.364Z Record version: sha256:7c306ad4a9911b6b60fae69378a78b6ed20bbce8a147ab378ed29e3604e82fdc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [958-810-55-16A through 55-16I](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-16A) provide additional guidance on assessing limited partners' protective rights and substantive participating rights. Source downloaded (UTC): 2026-09-10T01:33:17.563Z to 2026-09-10T01:33:17.563Z Record version: sha256:e64bf8742212e293e9ec257c45ac1cc8fc0012419f4f5652d4f75db74ba7b3a7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-958-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/810/958/#45-other-presentation-matters) SEC content: no #### Presentation of Noncontrolling Interests ##### [810-958-45-1](https://asc.understandingaccounting.org/asc/810/958/#810-958-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:17.563Z to 2026-09-10T01:33:17.563Z Record version: sha256:415892817d9061380dd6fe793f88163df2a4a3605d3661ede81e0514b79a7ff2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Noncontrolling interests](https://asc.understandingaccounting.org/glossary/n/#noncontrolling-interest "The portion of equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. A noncontrolling interest is sometimes called a minority interest.") in the equity (net assets) of consolidated subsidiaries shall be reported as a separate component of the appropriate class of net assets in the consolidated statement of financial position of a not-for-profit entity (NFP). That amount shall be clearly identified and described (for example, as _noncontrolling ownership interest in subsidiaries_) to distinguish it from the components of net assets of the parent, which includes the parent's controlling financial interest in its subsidiaries. See paragraphs [958-810-50-4 through 50-5](https://asc.understandingaccounting.org/asc/810/958/#810-958-50-4) for additional guidance on the requirement related to disclosure of noncontrolling interests either on the face of the statement of activities or in the notes. The effects of [donor-imposed restrictions](https://asc.understandingaccounting.org/glossary/d/#donor-imposed-restriction "A donor stipulation (donors include other types of contributors, including makers of certain grants) that specifies a use for a contributed asset that is more specific than broad limits resulting from the following: The nature of the not-for-profit entity (NFP) The environment in which it operates The purposes specified in its articles of incorporation or bylaws or comparable documents for an unincorporated association. Some donors impose restrictions that are temporary in nature, for example, stipulating that resources be used after a specified date, for particular programs or services, or to acquire buildings or equipment. Other donors impose restrictions that are perpetual in nature, for example, stipulating that resources be maintained in perpetuity. Laws may extend those limits to investment returns from those resources and to other enhancements (diminishments) of those resources. Thus, those laws extend donor-imposed restrictions."), if any, on a partially owned subsidiary's net assets shall be reported in accordance with Subtopics 958-205 and 958-220. Example 1 (see paragraphs [958-810-55-17 through 55-25](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-17) ) illustrates the reporting requirements. #### Additional Useful Information for Limited Partnerships ##### [810-958-45-2](https://asc.understandingaccounting.org/asc/810/958/#810-958-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:17.563Z to 2026-09-10T01:33:17.563Z Record version: sha256:d92a55b9875cd148b3dd4f7c3fdf5783974d9f02200a1803fbe523b0e711f3ad Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity has financial statement and disclosure alternatives that may provide additional useful information. For example, an entity may highlight the effects of consolidating a [limited partnership](https://asc.understandingaccounting.org/glossary/l/#limited-partnership "An association in which one or more general partners have unlimited liability and one or more partners have limited liability. A limited partnership is usually managed by the general partner or partners, subject to limitations, if any, imposed by the partnership agreement.") by providing consolidating financial statements or separately classifying the assets and liabilities of the limited partnership(s) on the face of the balance sheet. Source downloaded (UTC): 2026-09-10T01:33:21.105Z to 2026-09-10T01:33:21.105Z Record version: sha256:3ee192c641015d40ba21e46d721344210f461041d027fff77a43dc0ca5ac60c6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-958-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/810/958/#50-disclosure) SEC content: no ##### [810-958-50-1](https://asc.understandingaccounting.org/asc/810/958/#810-958-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:21.105Z to 2026-09-10T01:33:21.105Z Record version: sha256:d8f6e448a5d62d9590e3c9f6ebb102cfec8c8ff23403f147e6149a08f8c96742 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If consolidated financial statements are presented, the reporting entity (parent) shall disclose any restrictions made by entities outside of the reporting entity on distributions from the controlled [not-for-profit entity](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFP) (subsidiary) to the parent and any resulting unavailability of the net assets of the subsidiary for use by the parent. ##### [810-958-50-2](https://asc.understandingaccounting.org/asc/810/958/#810-958-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:21.105Z to 2026-09-10T01:33:21.105Z Record version: sha256:0c31c0bc97c13d5aa4ce9643ae48e71639b36331256334f9890f00317bf4a7f3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If, as described in paragraph [958-810-25-4](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-4), an NFP (the reporting entity) controls a related but separate NFP through a form other than majority ownership interest, sole corporate membership, or majority voting interest in the board of the other entity and has an [economic interest](https://asc.understandingaccounting.org/glossary/e/#economic-interest "A not-for-profit entity's (NFP's) interest in another entity that exists if any of the following criteria are met: The other entity holds or utilizes significant resources that must be used for the purposes of the NFP, either directly or indirectly by producing income or providing services. The NFP is responsible for the liabilities of the other entity. See paragraph 958-810-55-6 for examples of economic interests.") in that other NFP, the reporting entity shall disclose all of the following information if it does not present consolidated financial statements: 1. a Identification of the other NFP and the nature of its relationship with the reporting entity that results in [control](https://asc.understandingaccounting.org/glossary/c/#control "The direct or indirect ability to determine the direction of management and policies through ownership, contract, or otherwise.") 2. b Summarized financial data of the other NFP, which shall include the following information: 1. 1 Total assets, liabilities, net assets, revenue, and expenses 2. 2 Resources that are held for the benefit of the reporting entity or that are under its control. 3. c The disclosures required by paragraphs [850-10-50-1 through 50-6](https://asc.understandingaccounting.org/asc/850/10/#850-10-50-1) . ##### [810-958-50-3](https://asc.understandingaccounting.org/asc/810/958/#810-958-50-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:21.105Z to 2026-09-10T01:33:21.105Z Record version: sha256:84cc5f8a8c047a53fa5f100f45ee683a03c6a1f0d8a07266574871021311b436 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The existence of control or an economic interest, but not both, as described in paragraph [958-810-25-5](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-5), requires the disclosures in paragraphs [850-10-50-1 through 50-6](https://asc.understandingaccounting.org/asc/850/10/#850-10-50-1) . (The existence of an economic interest does not necessarily cause the entities to be [related parties](https://asc.understandingaccounting.org/glossary/r/#related-parties "Related parties include: Affiliates of the entity Entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825-10-15, to be accounted for by the equity method by the investing entity Trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management Principal owners of the entity and members of their immediate families Management of the entity and members of their immediate families Other parties with which the entity may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests Other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests."). However, the disclosures in those paragraphs are required if an economic interest exists.) #### Disclosures for Noncontrolling Interests ##### [810-958-50-4](https://asc.understandingaccounting.org/asc/810/958/#810-958-50-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:21.105Z to 2026-09-10T01:33:21.105Z Record version: sha256:df964f3840903c4819d64934b425bca366628071572e49f350423c4c5b2ff6b3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An NFP (parent) that has one or more consolidated subsidiaries with a [noncontrolling interest](https://asc.understandingaccounting.org/glossary/n/#noncontrolling-interest "The portion of equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. A noncontrolling interest is sometimes called a minority interest.") shall provide a schedule of changes in consolidated net assets attributable to the parent and the noncontrolling interest either in notes to the consolidated financial statements or on the face of financial statements, if practicable. That schedule shall reconcile beginning and ending balances of the parent's controlling interest and the noncontrolling interests for each class of net assets for which a noncontrolling interest exists during the reporting period. ##### [810-958-50-5](https://asc.understandingaccounting.org/asc/810/958/#810-958-50-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:21.105Z to 2026-09-10T01:33:21.105Z Record version: sha256:ab2f803b929d467d05bcfdaffecad16387f5661aa8b00881deb4f90832928f18 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The schedule required by the preceding paragraph shall, at a minimum, include: 1. a A performance indicator, if the entity is a not-for-profit, business-oriented health care entity (see Section 954-10-15) 2. b Amounts of discontinued operations 3. c [Subparagraph superseded by Accounting Standards Update No. 2015-01](https://asc.understandingaccounting.org/updates/asu-2015-01/). 4. d Changes in ownership interests in a subsidiary, including investments by and distributions to noncontrolling interests acting in their capacity as owners, which shall be reported separate from any revenues, expenses, gains, or losses and outside any measure of operations, if reported 5. e An aggregate amount of all other changes in [net assets without donor restrictions](https://asc.understandingaccounting.org/glossary/n/#net-assets-without-donor-restrictions "The part of net assets of a not-for-profit entity that is not subject to donor-imposed restrictions (donors include other types of contributors, including makers of certain grants).") and [net assets with donor restrictions](https://asc.understandingaccounting.org/glossary/n/#net-assets-with-donor-restrictions "The part of net assets of a not-for-profit entity that is subject to donor-imposed restrictions (donors include other types of contributors, including makers of certain grants).") for the period. ##### [810-958-50-6](https://asc.understandingaccounting.org/asc/810/958/#810-958-50-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:21.105Z to 2026-09-10T01:33:21.105Z Record version: sha256:ee5285a576faff3072fe2cb76e281edb1adf1c6faabe899474894f60b3283d92 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [958-810-55-25](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-25) illustrates the required disclosures using a reconciling schedule in notes to the consolidated financial statements. Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:c6e730fcd5cb9d9bd78664f5e83608365a1b0249879aa62da280b861ed659495 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-958-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/810/958/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [810-958-55-1](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:cd0474f267032f4a9904030fe5d8442f3bb201fcd4929a385a60cad96fc62d2d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section, which is an integral part of the requirements of this Subtopic, provides general guidance to be used by a [not-for-profit entity](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFP) in reporting relationships discussed in this Subtopic. ##### [810-958-55-2](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:a4f2ef34835d40f076036cadde475e53bf478aad9dfee27fd6378f9f52b069a0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following flowcharts are not intended as substitutes for the guidance in this Subtopic or in the Topics referenced in the flowcharts. ##### [810-958-55-3](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:602e1e0d2f87d9cb12b88037aedcdbc07a317be95943515b83e0b776d1c618d8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following flowchart summarizes the guidance in Section 958-810-25. - ![](https://asc.understandingaccounting.org/asc-img/GUID-B7522E58-9D42-44AC-A18B-205FB135593E-low.gif) ##### [810-958-55-4](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:f5bb37015e08db99571d4476e49fb136528b0a1b030ddee1cceed3fdcc620792 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following flowchart and related footnote indicate the order in which an NFP applies the guidance elsewhere in the Codification to determine the accounting for its relationship with a for-profit entity. - ![](https://asc.understandingaccounting.org/asc-img/GUID-97CA6149-9691-494E-A593-74B136149EA8-low.gif) - \*According to paragraph [323-30-35-3](https://asc.understandingaccounting.org/asc/323/30/#323-30-35-3), a limited liability company that maintains a specific ownership account for each investor—similar to a partnership capital account structure—should be viewed as similar to an investment in a [limited partnership](https://asc.understandingaccounting.org/glossary/l/#limited-partnership "An association in which one or more general partners have unlimited liability and one or more partners have limited liability. A limited partnership is usually managed by the general partner or partners, subject to limitations, if any, imposed by the partnership agreement.") for purposes of determining whether a noncontrolling investment in a limited liability company should be accounted for in accordance with the guidance in Topic 321 or the equity method. ##### [810-958-55-4A](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-4A) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:8036dd4a5ec60d40f7efe3988a5f4a4e2b4e9dd9baaeea83d2ac2eb34ec3441d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This paragraph provides implementation guidance on the application of paragraph [958-810-25-2A](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-2A) to situations in which certain actions require approval by a supermajority vote of the board. That paragraph states that such voting requirements might overcome the presumption of control by the owner or holder of a majority voting interest. An NFP shall exercise judgment in evaluating such situations. If supermajority voting requirements exist—for example, a specified supermajority of the board is needed to approve fundamental actions such as amending the articles of incorporation or dissolving the entity, an NFP shall consider whether those voting requirements have little or no effect on the ability to control the other entity's operations or assets or, alternatively, whether those voting requirements are so restrictive as to call into question whether control rests with the holder of the majority voting interest. The guidance in paragraphs [810-10-25-2 through 25-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-2) may be helpful in considering whether the inability of the majority voting interest to unilaterally approve certain actions due to supermajority voting requirements is substantial enough to overcome the presumption of control. ##### [810-958-55-5](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:8f651cbeb7837751e9d1ec126f80307b543f5ff60ec712caac288a3071b58475 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A majority voting interest in the board of another entity, as referred to in paragraph [958-810-25-3](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-3), is illustrated by the following example. Entity B has a five-member board, and a simple voting majority is required to approve board actions. Entity A will have a majority voting interest in the board of Entity B if Entity A has the ability to appoint three or more of Entity B's board members. If three of Entity A's board members, employees, or officers serve on the board of Entity B but Entity A does not have the ability to require that those members serve on the Entity B board, Entity A does not have a majority voting interest in the board of Entity B. ##### [810-958-55-6](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:674fc5c3ae961081da14a6aaff3ae133800816edf34b00c1e553e2a49cf11285 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following are examples of [economic interests](https://asc.understandingaccounting.org/glossary/e/#economic-interest "A not-for-profit entity's (NFP's) interest in another entity that exists if any of the following criteria are met: The other entity holds or utilizes significant resources that must be used for the purposes of the NFP, either directly or indirectly by producing income or providing services. The NFP is responsible for the liabilities of the other entity. See paragraph 958-810-55-6 for examples of economic interests."): 1. a Other entities solicit funds in the name of and with the expressed or implied approval of the NFP, and substantially all of the funds solicited are intended by the contributor or are otherwise required to be transferred to the NFP or used at its discretion or direction. 2. b An NFP transfers significant resources to another entity whose resources are held for the benefit of the NFP. 3. c An NFP assigns certain significant functions to another entity. 4. d An NFP provides or is committed to provide funds for another entity or guarantees significant debt of another entity. 5. e An NFP has a right to or a responsibility for the operating results of another entity. Or upon dissolution, an NFP is entitled to the net assets, or is responsible for any deficit, of another entity. ##### [810-958-55-7](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:5d56c37f619a44ed30103cdfbb95fb5b403718b134ace0fbfcbd43fff234d91c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For an NFP that is engaged in leasing transactions with a special-purpose-entity (SPE) lessor, this implementation guidance addresses the following matters: 1. a Multiple properties within a single SPE lessor 2. b Multitiered SPE structures 3. c Payments to equity owners of an SPE during the [lease term](https://asc.understandingaccounting.org/glossary/l/#lease-term "The noncancellable period for which a lessee has the right to use an underlying asset, together with all of the following: Periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option Periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option Periods covered by an option to extend (or not to terminate) the lease in which exercise of the option is controlled by the lessor.") 4. d Fees paid to owners of record of an SPE 5. e Source of initial minimum equity investment 6. f Payment to owners of record of an SPE before the lease term 7. g [Subparagraph superseded by Accounting Standards Update No. 2016-02](https://asc.understandingaccounting.org/updates/asu-2016-02/). ##### [810-958-55-8](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:8cb8e905cd8f7f0f2506d33c4a06f4ea9f38de4b9f490ce6865454d7c4650fb2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance addresses the application of paragraph [958-810-25-8(a)](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-8) to a transaction involving all of the following characteristics: 1. a An SPE is formed to acquire two separate properties that are to be leased to two unrelated lessees. 2. b The two asset acquisitions are financed with the proceeds from two nonrecourse borrowings that do not contain cross-collateral provisions; that is, in the event of default, each borrowing is collateralized only by a pledge of the respective assets leased to a single lessee and an assignment of the respective lease payments under the related lease. 3. c The SPE has no assets other than the leased properties and the related leases. ##### [810-958-55-9](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:50018cc3be768ae13ebd777e6c7bcb1d322a7d60a6a49f39ed0f616a8ed36a1d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The use of nonrecourse debt with no cross-collateral provisions effectively segregates the cash flows and assets associated with the two leases and, therefore, in substance, creates two SPEs. For purposes of applying the provisions of paragraph [958-810-25-8](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-8), each lessee would be considered to have satisfied the condition in paragraph [958-810-25-8(a)](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-8). For either lessee to be in a position of not satisfying that condition, the assets of the SPE (subject to the two leases) would need to be commingled such that, in the event of default, both lenders to the SPE would have equal rights (that is, pari passu) to the cash flows and assets related to both leases of the SPE. In this regard, the amounts of the cash flows from each lease and the fair values of the individual assets subject to the leases must represent more than a minor amount (that is, more than 10 percent) of the aggregate cash flows from all leases and the aggregate fair value of all assets of the SPE, respectively. ##### [810-958-55-10](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:1adc07eef8f6a1eddd49d5d1e6dd961702f968fa8fb489a5f5300930e4655a12 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance addresses the level at which an entity should apply the conditions in paragraph [958-810-25-8](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-8) to a transaction having all of the following characteristics: 1. a Sponsor forms an SPE, SPE A. 2. b SPE A acquires property with the proceeds from nonrecourse debt and leases the property to Lessee A. 3. c SPE A has no other activities and the terms of the lease satisfy the condition in paragraph [958-810-25-8(b)](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-8), which discusses the residual risks and rewards associated with the leased assets and related debt. 4. d The sponsor owns 100 percent of SPE A's voting common stock. 5. e The sponsor contributes the common stock of SPE A to capitalize another SPE (SPE B) that is formed to own and lease assets to Lessee B. 6. f The other assets of SPE B are financed entirely with nonrecourse debt and are subject to a lease, the terms of which also satisfy the condition in paragraph [958-810-25-8(b)](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-8). Thus, SPE B, which is wholly owned by the sponsor, becomes the parent of SPE A. ##### [810-958-55-11](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:07df26e83e4fe2bcd4c78271940268b219460cd9ffa0345b887366a8c8c4df7b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Consistent with the implementation guidance in paragraph [958-810-55-8](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-8) that addresses multiple properties within a single SPE, the conditions set forth in paragraph [958-810-25-8](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-8) shall be applied at the lowest level at which the parties to a transaction create an isolated entity, whether by contract or otherwise. Therefore, in the situation described in the preceding paragraph, the test for compliance with the condition in paragraph [958-810-25-8(a)](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-8) should be applied to the parent-only financial statements of SPE B. ##### [810-958-55-12](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:67431fb00da3bc2c915a20641b05faf5ae6cae153a8ff42a8d45b4226ca43ce5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In the transaction described in paragraph [958-810-55-10](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-10), assume the assets of SPE B will include the common stock of SPE A and the assets leased to Lessee B. Ownership of the stock of another SPE that is engaged in leasing property would not constitute an activity contemplated by the condition in paragraph [958-810-25-8(a)](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-8). Accordingly, in this situation, the lessee shall consider that condition to be satisfied in evaluating the activities of SPE B. In addition, the sponsor's contribution of the stock of SPE A to capitalize SPE B shall not be considered an initial substantive residual equity capital investment, as contemplated by the condition in paragraph [958-810-25-8(c)](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-8), because a sponsor's investment shall not be used to capitalize more than one SPE for purposes of applying that condition. ##### [810-958-55-13](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:4a393318cc88b009f7f6298c564dd68d03c61c5df7b5bff337bfbf110b4d1e7c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The characterization of any payments made by the SPE-lessor to its owners of record shall be based on the SPE's GAAP basis financial statements. That is, distributions of the SPE-lessor's GAAP basis change in net assets shall be considered a return on equity capital, but any distribution in excess of previously undistributed GAAP change in net assets shall be considered a return of equity capital, which would reduce the amount of the equity capital investment that is at risk. If the amount of the equity capital investment is reduced below the minimum amount required as a result of a distribution in excess of previously undistributed GAAP change in net assets, the owner of record would have to make an additional investment to continue to avoid the condition in paragraph [958-810-25-8(c)](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-8). An owner of record would not be required to make an additional equity capital investment if residual equity capital is reduced below the minimum amount required because of losses recorded by the SPE in accordance with generally accepted accounting principles. ##### [810-958-55-14](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:fd0447ad51b604fd465398c22e1b425e45302ba61599d45d0583a2dbd35a00fa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [842-10-30-5(e)](https://asc.understandingaccounting.org/asc/842/10/#842-10-30-5) states that, for a lessee, lease payments include fees that are paid by the lessee to the owners of the special-purpose entity for structuring the lease transaction. Paragraph [842-10-30-5(e)](https://asc.understandingaccounting.org/asc/842/10/#842-10-30-5) states that such fees shall be included as part of lease payments (but shall not be included in the fair value of the underlying asset) for purposes of applying the criterion in paragraph [842-10-25-2(d)](https://asc.understandingaccounting.org/asc/842/10/#842-10-25-2). With respect to the SPE and the application of the guidance in paragraph [958-810-25-8](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-8), the fees paid by the lessee to the owners of the SPE shall be considered a return of the owners' initial equity capital investment. To the extent that the fees reduce the equity capital investment below the minimum amount required, the owners of record would not be considered to have a substantive residual equity capital investment that is at risk during the entire term of the lease. ##### [810-958-55-15](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:f5474262256a67806937ca1eb871d86d0e05fc900801fdccf7303123719b29c5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the source of the funds used to make the initial minimum equity investment in an SPE lessor is financed with nonrecourse debt that is collateralized by a pledge of the investment, the investment shall not meet the at-risk requirement in paragraph [958-810-25-8(c)](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-8). Similarly, that at-risk requirement shall not be met if the owners purchased residual insurance or obtained a residual guarantee in an amount that would ensure recovery of their equity investment. If the initial minimum equity investment is financed with recourse debt from a party not related to the lessee, the owners (borrowers) shall have other assets at risk to support the borrowing to avoid the condition in paragraph [958-810-25-8(c)](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-8). Thus, if the loans were full recourse loans and if the fair value of the residual equity investment serves as collateral for the debt, the lessor-owner shall be considered at risk to the extent that the owners of record are liable for any decline in the fair value of the residual interest and have, and are expected to continue to have during the term of the lease, other significant assets, in addition to and of a value that exceeds their equity investment, that are at risk. ##### [810-958-55-16](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:806ce16a35ae7fa500011a09a157924bded58123b872e54ddb27849c6289479b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In some build-to-suit lease transactions involving SPEs, the lease or related construction agreement provides that the SPE will construct, or cause to be constructed, the property that is to be leased. The terms of the construction or lease agreements provide that payments are to be made by the SPE to the owners of record during the construction period, which, in some cases, may be several years. Such payments generally are made to provide the owners of record with a cash yield on their equity capital investments. Payments made by the SPE to the owners of record of the SPE during the construction period shall be deemed to be a return of their initial equity capital investment as opposed to a return on their equity capital investment. To the extent that those payments reduce the equity capital investment below the minimum amount required under paragraph [958-810-25-8](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-8), the owners of record of the SPE shall not be considered to have made an initial substantive residual equity capital investment that is at risk during the entire lease term. ##### [810-958-55-16A](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-16A) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:d89cdd7e080afde785e508b3384bf89bc2ece0955fdbebf4db12d1f5a71e7a4b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following implementation guidance is intended to facilitate the understanding of how to assess whether the rights of the limited partners should be considered [protective rights](https://asc.understandingaccounting.org/glossary/p/#protective-rights-voting-interest-entity-definition "Rights that are only protective in nature and that do not allow the limited partners or noncontrolling shareholders to participate in significant financial and operating decisions of the limited partnership or corporation that are made in the ordinary course of business.") or [participating rights](https://asc.understandingaccounting.org/glossary/p/#participating-rights-voting-interest-entity-definition "Participating rights allow the limited partners or noncontrolling shareholders to block or participate in certain significant financial and operating decisions of the limited partnership or corporation that are made in the ordinary course of business. Participating rights do not require the holders of such rights to have the ability to initiate actions.") and, if participating rights, whether the rights are substantive. Although this guidance illustrates possible assessments of individual limited partners' rights, the evaluation of limited partners' rights should consider all of the factors identified in paragraph [958-810-25-27](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-27) to determine whether the limited partners' rights, individually or in the aggregate, provide for the limited partners to effectively participate in significant decisions that would be expected to be made in the [ordinary course of business](https://asc.understandingaccounting.org/glossary/o/#ordinary-course-of-business "Decisions about matters of a type consistent with those normally expected to be addressed in directing and carrying out current business activities, regardless of whether the events or transactions that would necessitate such decisions are expected to occur in the near term. However, it must be at least reasonably possible that those events or transactions that would necessitate such decisions will occur. The ordinary course of business does not include self-dealing transactions."). ##### [810-958-55-16B](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-16B) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:0da7443d3d9c502ea4b3543db41c468688696a2e07f76c21d58d51b75a30c623 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The rights of the limited partners relating to the approval of acquisitions and dispositions of assets that are expected to be undertaken in the ordinary course of business may be substantive participating rights. Rights related only to acquisitions that are not expected to be undertaken in the ordinary course of business usually are protective and do not overcome the presumption of control by the general partners in the limited partnership. Determining whether the right to approve the acquisition or disposition of assets is in the ordinary course of business should be based on an evaluation of the relevant facts and circumstances. In addition, if approval by the limited partners is necessary to incur additional indebtedness to finance an acquisition that is not in the limited partnership's ordinary course of business, then the approval by the limited partners is considered a protective right. ##### [810-958-55-16C](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-16C) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:793e664e1156980f282276df76cd3d6ca6b0e1a4ee979288cdf99a25ce4510b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Existing facts and circumstances should be considered in assessing whether the rights of the limited partners relating to a limited partnership incurring additional indebtedness are protective or participating rights. For example, if it is reasonably possible or probable that the limited partnership will need to incur the level of borrowing that requires limited partner approval in its ordinary course of business, the rights of the limited partners are viewed as substantive participating rights. ##### [810-958-55-16D](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-16D) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:1feee9f42de538fffdc446d03bb34c053e48f56c08ea4084e35738839213cd69 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The rights of the limited partners relating to dividends or other distributions may be protective or participating and should be assessed in light of the available facts and circumstances. For example, rights to block customary or expected dividends or other distributions may be substantive participating rights, while rights to block extraordinary distributions are protective rights. ##### [810-958-55-16E](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-16E) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:991ae61094da9e9a77126308f03e7592bec7e871e2e67b0357864ced01cf2d4d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The rights of the limited partners relating to a limited partnership's specific action (for example, to lease property) in an existing business may be protective or participating and should be assessed in light of the available facts and circumstances. For example, if the limited partnership had the ability to purchase, rather than lease, the property without requiring the approval of the limited partners, then the rights of the limited partners to block the limited partnership from entering into a [lease](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.") are not substantive participating rights. ##### [810-958-55-16F](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-16F) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:e108265fbaa483d53093b986bfd6ace98d720cc99eb55a8078286eab83dba411 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The rights of the limited partners relating to a limited partnership's negotiation of collective-bargaining agreements with unions may be protective or participating and should be assessed in light of the available facts and circumstances. For example, if a limited partnership does not have a collective-bargaining agreement with a union or if the union does not represent a substantial portion of the limited partnership's work force, then the rights of the limited partners to approve or veto a new or broader collective-bargaining agreement are not substantive participating rights. ##### [810-958-55-16G](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-16G) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:a1655b16982bc2178f2455aab3b1ce55f63be83fed549b7176e5741b15cf2eb5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Provisions that govern what will occur if the limited partners block the action of the general partners need to be considered to determine whether the rights of the limited partners to block have substance. For example, if both of the following circumstances exist, then the rights of the limited partners to block the approval of the operating and capital budgets do not allow the limited partners to effectively participate and, thus, are not substantive participating rights: 1. a The limited partnership agreement provides that if the limited partners block the approval of operating and capital budgets, then the budgets simply default to last year's budgets adjusted for inflation. 2. b The limited partnership operates in a mature business for which year-to-year operating and capital budgets would not be expected to vary significantly. ##### [810-958-55-16H](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-16H) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:cd30c9e78e546db9ed6f8c0376801accce0c47e9593aaf409995b9081d9d90b0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Limited partners' rights relating to the initiation or resolution of a lawsuit may be considered protective or participating depending on the available facts and circumstances. For example, if lawsuits are a part of, or are expected to be a part of, the limited partnership's ordinary course of business, as is the case for some insurance entities, then the limited partners' rights may be considered substantive participating rights. ##### [810-958-55-16I](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-16I) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:edcc2c891bf63e083a04e376659f2f1d256b7df9a3c2f16ebb0dd366c4fe749f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The limited partners have the right to veto the annual operating and capital budgets for the first X years of the limited partnership. Based on the facts and circumstances, during the first X years of the limited partnership, this right may be a substantive participating right. However, following Year X there is a significant change in the exercisability of the limited partners' right (for example, the veto right terminates). As of the beginning of the period following Year X the presumption that the general partners control the partnership no longer is overcome because that right no longer exists. #### Illustrations ##### [810-958-55-17](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:ebb33a0dce6f312df91e6496afbc0dbffc74cb8a50654006e1bb3a38058fe52c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates one way in which the consolidated financial statements of an NFP might satisfy the presentation and disclosure requirements for noncontrolling interests in a consolidated subsidiary and subsequent changes in ownership interests of that subsidiary. This Example uses simplified assumptions and highly aggregated amounts to illustrate how to apply the provisions of Topic 810 and Subtopic 958-810. ##### [810-958-55-18](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:dd2d7dc47db72f336a142ee517bdf970f21b905e3ff805ff379e2e89f1437c8a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For example, the consolidated statement of financial position in paragraph [958-810-55-23](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-23) shows relatively few highly aggregated amounts of assets and liabilities, and the consolidated statement of operations and other changes in [net assets without donor restrictions](https://asc.understandingaccounting.org/glossary/n/#net-assets-without-donor-restrictions "The part of net assets of a not-for-profit entity that is not subject to donor-imposed restrictions (donors include other types of contributors, including makers of certain grants).") in paragraph [958-810-55-24](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-24) shows relatively few highly aggregated amounts of revenues and expenses rather than details such as expenses by function or nature. The consolidated statement of financial position also does not classify assets and liabilities, which is required for a not-for-profit, business-oriented health care entity by paragraph [954-210-45-1](https://asc.understandingaccounting.org/asc/210/954/#210-954-45-1). This Example also omits a statement of cash flows, which does not bear on the presentation and disclosure requirements for noncontrolling interests. ##### [810-958-55-19](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:b4cd6f38ee898b2561d34e12c4a575519259033b20f1c9602338900a72cf2f6a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Formats or levels of detail other than those presented in this Example may be appropriate for other situations. For example, the related net assets and noncontrolling interest would be presented in [net assets with donor restrictions](https://asc.understandingaccounting.org/glossary/n/#net-assets-with-donor-restrictions "The part of net assets of a not-for-profit entity that is subject to donor-imposed restrictions (donors include other types of contributors, including makers of certain grants).") if [donor-imposed restrictions](https://asc.understandingaccounting.org/glossary/d/#donor-imposed-restriction "A donor stipulation (donors include other types of contributors, including makers of certain grants) that specifies a use for a contributed asset that is more specific than broad limits resulting from the following: The nature of the not-for-profit entity (NFP) The environment in which it operates The purposes specified in its articles of incorporation or bylaws or comparable documents for an unincorporated association. Some donors impose restrictions that are temporary in nature, for example, stipulating that resources be used after a specified date, for particular programs or services, or to acquire buildings or equipment. Other donors impose restrictions that are perpetual in nature, for example, stipulating that resources be maintained in perpetuity. Laws may extend those limits to investment returns from those resources and to other enhancements (diminishments) of those resources. Thus, those laws extend donor-imposed restrictions.") on the use of the subsidiary's net assets existed in this Example (see paragraph [958-810-45-1](https://asc.understandingaccounting.org/asc/810/958/#810-958-45-1)). ##### [810-958-55-20](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-20) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:df9beeefbf3c81b64b09b807ae42f0e1c96d51feef092e9de4e4339947737c53 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following assumptions are applicable to all years: 1. a Hospital A, a tax-exempt NFP has one subsidiary, Subsidiary A. That ownership interest in Subsidiary A was purchased; there are no donor-imposed restrictions on the use of Subsidiary A's net assets. 2. b Subsidiary A is an investor-owned entity that is subject to income taxes. The tax rate for all years is 40 percent. 3. c Subsidiary A has 10,000 shares of common stock outstanding and does not pay dividends. ##### [810-958-55-21](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-21) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:4faced244fcb5150c14b586a663342dd2ff83db198654dc440f00801c3e2cc25 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following assumptions are applicable to 20X2: 1. a On January 1, 20X2, Hospital A sells 2,000 of its 10,000 shares in Subsidiary A to an unrelated entity for $50,000 in cash, reducing its ownership interest from 100 percent to 80 percent. Immediately before the sale, Subsidiary A's equity was as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-AE07CD9A-E74D-479E-8984-015C8FB5399A-low.gif) Subsidiary A Common stock " $25,000 " Paid-in capital " 50,000 " Retained earnings " 125,000 " Accumulated other comprehensive income " 5,000 " Total equity " $205,000 " 2. b The accumulated other comprehensive income balance of $5,000 represents an unrealized gain on a portfolio of debt securities purchased by Subsidiary A for $100,000, which it classifies as available-for-sale debt securities at the carrying amount of $105,000 and are the only investment securities of the consolidated group. 3. c The sale of Subsidiary A's shares is accounted for as an equity transaction (within [net assets without donor restrictions](https://asc.understandingaccounting.org/glossary/n/#net-assets-without-donor-restrictions "The part of net assets of a not-for-profit entity that is not subject to donor-imposed restrictions (donors include other types of contributors, including makers of certain grants).")) in the consolidated financial statements of Hospital A, as follows: 1. 1 A noncontrolling interest is recognized in net assets without donor restrictions in the amount of $41,000 ($205,000 × 20 percent). 2. 2 Net assets without donor restrictions attributable to Hospital A are increased by $9,000, calculated as the difference between the cash received ($50,000) and the carrying amount of the noncontrolling interest ($41,000). 3. 3 The top-level (consolidated) journal entry to record the sale of Subsidiary A's shares to the noncontrolling shareholder is as follows: - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-955F5108-3E1A-4A8E-89FB-1771084A9BE2-low.gif) Cash " $50,000 " Net assets without donor restrictions (noncontrolling interest) " $41,000 " Net assets without donor restrictions (Hospital A) " 9,000 " 4. d For the year ended December 31, 20X2, the amount of Subsidiary A's net income included in the consolidated financial statements is $20,000, which included a net loss for discontinued operations of $7,000. ##### [810-958-55-22](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-22) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:3e373e444dc1a1300bf20308e0f3dcc6f6ae91e663879be5d05913606bcee15b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following assumptions are applicable to 20X3: 1. a On January 1, 20X3, Hospital A purchases 1,000 shares in Subsidiary A from the noncontrolling shareholders (50 percent of the noncontrolling interest) for $30,000 cash, increasing its ownership interest from 80 percent to 90 percent. Immediately before that purchase, the carrying amount of the noncontrolling interest in Subsidiary A was $48,000. The purchase of shares from the noncontrolling shareholders is accounted for as an equity transaction in the consolidated financial statements, as follows: 1. 1 The noncontrolling interest balance within net assets without donor restrictions is reduced by $24,000 ($48,000 × 50 percent interest acquired by Hospital A). 2. 2 Net assets without donor restrictions attributable to Hospital A are decreased by $6,000, calculated as the difference between the cash paid ($30,000) and the adjustment to the carrying amount of the noncontrolling interest ($24,000). 3. 3 The top-level (consolidated) journal entry to record that purchase of Subsidiary A's shares from the noncontrolling shareholders is as follows: - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-14AA156A-400F-46CE-A36A-F728706A2F5C-low.gif) Net assets without donor restrictions (noncontrolling interest) " $24,000 " Net assets without donor restrictions (Hospital A) " 6,000 " Cash " $30,000 " 2. b For the year ended December 31, 20X3, the amount of Subsidiary A's net income included in the consolidated financial statements is $15,000. ##### [810-958-55-23](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-23) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:f9abda9f3b35b9988258e54fefaa7861ac7daebb23f282515a0e7b1f33d12bf0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following consolidated statement of financial position illustrates the requirement in paragraph [958-810-45-1](https://asc.understandingaccounting.org/asc/810/958/#810-958-45-1) that Hospital A present the noncontrolling interest in the consolidated statement of financial position within net assets, but separately from the parent's net assets. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-FD237BB9-2F91-4BBE-AE25-0A77D48B067C-low.gif) "Hospital A Consolidated Statement of Financial Position As of December 31" 20X3 20X2 Assets: Cash " $570,000 " " $475,000 " Accounts receivable " 125,000 " " 110,000 " Investment securities " 125,000 " " 120,000 " Plant and equipment " 220,000 " " 235,000 " Total assets " $1,040,000 " " $940,000 " Liabilities: Total liabilities " $555,000 " " $459,000 " Net assets without donor restrictions: Hospital A " 459,000 " " 433,000 " Noncontrolling interests in Subsidiary A " 26,000 " " 48,000 " Total net assets without donor restrictions " 485,000 " " 481,000 " Total liabilities and net assets " $1,040,000 " " $940,000 " ##### [810-958-55-24](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-24) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:57dc7d13d9624fc9a4a6e88575cae5280d12483cc550f27746abd80c253707d4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following consolidated statement of operations and other changes in [net assets without donor restrictions](https://asc.understandingaccounting.org/glossary/n/#net-assets-without-donor-restrictions "The part of net assets of a not-for-profit entity that is not subject to donor-imposed restrictions (donors include other types of contributors, including makers of certain grants).") illustrates how the requirements in paragraph [958-810-50-5(a)](https://asc.understandingaccounting.org/asc/810/958/#810-958-50-5) for disclosure of the amounts of a performance indicator of a health care entity for an excess of revenues over expenses from continuing operations and in paragraph [958-810-50-5(b)](https://asc.understandingaccounting.org/asc/810/958/#810-958-50-5) for discontinued operations might be presented on the face of a consolidated statement of operations and other changes in net assets. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-F112DA9D-EFBE-4096-AF76-0B6A424CD2FE-low.gif) "Hospital A Consolidated Statement of Operations and Other Changes in Net Assets without Donor Restrictions Year Ended December 31" 20X3 20X2 "Revenues, gains, and other support without donor restrictions:" Net patient service revenue " $390,000 " " $355,000 " Contributions " 5,000 " " 5,000 " Net assets released from donors' restrictions used for operations - - "Total revenues, gains, and other support" " 395,000 " " 360,000 " Patient care and other operating expenses " 366,000 " " 337,000 " Excess of revenues over expenses (from continuing operations) " 29,000 " " 23,000 " "Discontinued operations of Subsidiary A, net" - " (7,000)" Change in net unrealized gains and losses on other than trading securities " 5,000 " " 15,000 " Sale of Subsidiary A shares to noncontrolling shareholders - " 50,000 " Purchase of Subsidiary A shares from noncontrolling shareholders " (30,000)" - Increase in net assets without donor restrictions " $4,000 " " $81,000 " ##### [810-958-55-25](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-25) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:f80335569bfa52897c1fd3a9fbaa9e6f2601e0106175d2b91fe816818e6fcd55 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following note depicts the changes in consolidated net assets attributable to the controlling financial interest of Hospital A (parent) and the noncontrolling interests. It illustrates the requirements in paragraph [958-810-50-4](https://asc.understandingaccounting.org/asc/810/958/#810-958-50-4) that an NFP present a schedule that reconciles the beginning and the end of the period carrying amounts of the parent's controlling interest and the noncontrolling interests for each class of net assets for which a noncontrolling interest exists. This note also illustrates the disclosure requirements in paragraph [958-810-50-5(a) through (b)](https://asc.understandingaccounting.org/asc/810/958/#810-958-50-5) and [(d) through (e)](https://asc.understandingaccounting.org/updates/page-2147480552/) for the amounts of a performance indicator of a health care entity (which is equivalent to income from continuing operations), for the amounts of discontinued operations, changes in ownership interests in a subsidiary, and the aggregate amount of all other changes in [net assets without donor restrictions](https://asc.understandingaccounting.org/glossary/n/#net-assets-without-donor-restrictions "The part of net assets of a not-for-profit entity that is not subject to donor-imposed restrictions (donors include other types of contributors, including makers of certain grants).") and [net assets with donor restrictions](https://asc.understandingaccounting.org/glossary/n/#net-assets-with-donor-restrictions "The part of net assets of a not-for-profit entity that is subject to donor-imposed restrictions (donors include other types of contributors, including makers of certain grants).") for the period. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-60BE2C06-A756-4223-A300-90095E5DA5FB-low.gif) "Hospital A Notes to Consolidated Financial Statements Changes in Consolidated Net Assets without Donor Restrictions Attributable to Hospital A and Transfers (to) from the Noncontrolling Interest Year Ended December 31" Total Controlling Interest Noncontrolling Interest "Balance January 1, 20X2" " $400,000 " " $400,000 " $- Excess of revenues over expenses (from continuing operations) " 23,000 " " 17,600 " " 5,400 " "Discontinued operations, net of tax" " (7,000)" " (5,600)" " (1,400)" "Change in net unrealized gains and losses on other than trading securities" " 15,000 " " 12,000 " " 3,000 " Sale of Subsidiary A shares to noncontrolling shareholders " 50,000 " " 9,000 " " 41,000 " Change in net assets " 81,000 " " 33,000 " " 48,000 " "Balance December 31, 20X2" " $481,000 " " $433,000 " " $48,000 " Excess of revenues over expenses from continuing operations " 29,000 " " 27,500 " " 1,500 " "Change in net unrealized gains and losses on other than trading securities" " 5,000 " " 4,500 " 500 Purchase of Subsidiary A shares from noncontrolling shareholders " (30,000)" " (6,000)" " (24,000)" Change in net assets " 4,000 " " 26,000 " " (22,000)" "Balance December 31, 20X3" " $485,000 " " $459,000 " " $26,000 " ##### [810-958-55-26](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-26) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:4d5cf9f5239d7fa9d3f333f1159405f8137a58cfe4254f81829b8b2c42a66c46 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraphs [958-810-25-19 through 25-20](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-19) . To illustrate the application of the simple majority threshold, consider the following Cases A, B, and C in which the [limited partnership](https://asc.understandingaccounting.org/glossary/l/#limited-partnership "An association in which one or more general partners have unlimited liability and one or more partners have limited liability. A limited partnership is usually managed by the general partner or partners, subject to limitations, if any, imposed by the partnership agreement.") agreement requires a simple majority of the limited partners' voting interests to remove the general partner and Case D in which a supermajority of the limited partners' voting interests is required for such removal: 1. a Three equal-interest limited partners (Case A) 2. b Two equal-interest limited partners (Case B) 3. c One hundred equal-interest limited partners (Case C) 4. d Required limited partner voting percentages greater than 50 percent (Case D). ##### [810-958-55-27](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-27) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:f2dbffc4ceee3ace6e76fe2a767844dd3e7450372acb241b9ece17bd8f35b82c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume that a limited partnership has 3 limited partners, none of which have any relationship to the general partners, and that each holds an equal amount of the limited partners' voting interests (33.33 percent). In this Case, applying the simple majority requirement in the partnership agreement would require a vote of no more than two of the three limited partners to remove the general partners. Accordingly, a provision that entitles any individual limited partner to remove the general partner or a provision that requires a vote of two of the limited partners to remove the general partner would meet the requirements of paragraph [958-810-25-19(a)](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-19) for a substantive [kick-out right](https://asc.understandingaccounting.org/glossary/k/#kick-out-rights-voting-interest-entity-definition "The rights underlying the limited partner's or partners' ability to dissolve (liquidate) the limited partnership or otherwise remove the general partners without cause."). However, if a vote of all three limited partners is required to remove the general partner, the right would not meet the requirements of that paragraph for a substantive kick-out right because the required vote is greater than a simple majority of the limited partners voting interests. ##### [810-958-55-28](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-28) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:30bee93bca8d5df5c306f44e3d0780e7fa97fc5603e4ecedd745984958d8445e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Consider the same facts as in Case A, except that there are two limited partners that each hold an equal interest. In this Case, a simple majority of the limited partners' voting interests would require a vote of both limited partners, so a provision entitling any individual limited partner to remove the general partner or a provision that requires a vote of both limited partners to remove the general partner would meet the requirements of paragraph [958-810-25-19(a)](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-19) for a substantive kick-out right. ##### [810-958-55-29](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-29) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:827611145f0bf7ad0a1758074e637b40862101027981455b6c7c448f0bc15491 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Consider the same facts as in Case A, except that there are 100 limited partners that each hold an equal interest. In this Case, a simple majority of the limited partners' voting interests would require a vote of 51 limited partners; therefore, a provision that requires a vote of less than 52 limited partners to remove the general partner would meet the requirements of paragraph [958-810-25-19(a)](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-19) for a substantive kick-out right. However, if a vote of 52 or more limited partners is required to remove the general partner, that provision would not meet the requirements of that paragraph for a substantive kick-out right because the required vote is greater than a simple majority of the limited partners' voting interests. ##### [810-958-55-30](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-30) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:240de63eea9f0b416f163737b781a48b6c21f37dd4cbf356a8de38d6afe72b6b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Case, consider the following situations based on a limited partnership agreement that requires a vote of 66.66 percent of the limited partners' voting interests to remove the general partner: 1. a Equal-interest limited partners (Case D1) 2. b Limited partners with unequal interests (Case D2). ##### [810-958-55-31](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-31) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:c09f132220fbe6c0568313bab3d3c9ae577a5f2d2c5a78da55d9784f63b3ee59 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. There are 3 independent limited partners that each hold an equal percentage (33.33 percent) of the limited partner voting interest. A vote of 2 of the 3 limited partners represents 66.66 percent of the limited partners voting interests, which also represents the smallest possible combination of voting interests that is at least a simple majority of the limited partners' voting interests. Assuming there are no barriers to the exercise of the kick-out rights, the kick-out rights in this Case meet the simple majority requirement and, therefore, represent substantive kick-out rights that overcome the presumption of control by the general partners. ##### [810-958-55-32](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-32) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:24.821Z to 2026-09-10T01:33:24.821Z Record version: sha256:f5ed486ec5a56b812cbf714f9e79a6174d64447b7227d92292fc17b2f348e4bb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. There are 3 independent limited partners that hold 45 percent (Limited Partner 1), 25 percent (Limited Partner 2), and 30 percent (Limited Partner 3) of the limited partners' voting interests, respectively. To remove the general partners, a vote of Limited Partner 1 in combination with either Limited Partner 2 or Limited Partner 3 would be a simple majority of the limited partners' voting interests and would satisfy the 66.66 percent contractual requirement. In contrast, a vote to exercise the kick-out right by Limited Partner 2 and Limited Partner 3 also would represent a simple majority of the limited partners' voting interests, but their 55 percent voting interests would not meet the contractually required threshold of 66.66 percent to remove the general partners. Accordingly, the kick-out right in this Case would be assessed as nonsubstantive because the smallest possible combination (Limited Partner 2 and Limited Partner 3) that represents at least a simple majority of the limited partners' voting interests cannot remove the general partners. Assuming the limited partners do not possess substantive participating rights, the presumption of control by the general partners would not be overcome. Source downloaded (UTC): 2026-09-10T01:33:27.061Z to 2026-09-10T01:33:27.061Z Record version: sha256:ea29f1a5cee6631d0b10072ada9115131afd2b046b6259ec5344798a028f97d6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-958-60: 60 Relationships [Read section](https://asc.understandingaccounting.org/asc/810/958/#60-relationships) SEC content: no #### Investments—Equity Method and Joint Ventures ##### [810-958-60-1](https://asc.understandingaccounting.org/asc/810/958/#810-958-60-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:27.061Z to 2026-09-10T01:33:27.061Z Record version: sha256:58c0c70e64cc8e29badbdbfd4d7bc2925ff549c591714df963dd18d9ad047bc6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For application of the equity method of accounting for an investment in a for-profit entity and the procedures for applying the equity method, see Subtopic 323-10. ##### [810-958-60-2](https://asc.understandingaccounting.org/asc/810/958/#810-958-60-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:27.061Z to 2026-09-10T01:33:27.061Z Record version: sha256:c1e9da9bf87105efb3d59f871e34658ce73cb0fc8ed457ac66d27e7a89642cf9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For the disclosures that are generally applicable to the equity method of accounting for investments, see Section 323-10-50. #### Consolidation ##### [810-958-60-3](https://asc.understandingaccounting.org/asc/810/958/#810-958-60-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:27.061Z to 2026-09-10T01:33:27.061Z Record version: sha256:559fd2c4dd3ccf352970f512ca684f957430e4f191600818d64d055e284cf2f3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For a description of a controlling financial interest through direct or indirect ownership of a majority voting interest, see paragraph [810-10-15-8](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-8). ##### [810-958-60-4](https://asc.understandingaccounting.org/asc/810/958/#810-958-60-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:27.061Z to 2026-09-10T01:33:27.061Z Record version: sha256:b500c49a29a10fe8722783a7f0f3462ac3b5fdbc61065407afd3564cca09816d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For the required disclosure of [consolidation](https://asc.understandingaccounting.org/glossary/c/#consolidation "The presentation of a single set of amounts for an entire reporting entity. Consolidation requires elimination of intra-entity transactions and balances.") policy, see paragraph [810-10-50-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-1). ##### [810-958-60-5](https://asc.understandingaccounting.org/asc/810/958/#810-958-60-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:27.061Z to 2026-09-10T01:33:27.061Z Record version: sha256:61067beb9f08f79a3ebb30860e76f586bdc47a817a72f5125f84cdbf5fe30cca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For circumstances in which [combined financial statements](https://asc.understandingaccounting.org/glossary/c/#combined-financial-statements "The financial statements of a combined group of commonly controlled entities or commonly managed entities presented as those of a single economic entity. The combined group does not include the parent.") of commonly controlled entities would be useful, see paragraph [810-10-55-1B](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-1B). ##### [810-958-60-6](https://asc.understandingaccounting.org/asc/810/958/#810-958-60-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:27.061Z to 2026-09-10T01:33:27.061Z Record version: sha256:ae8e16ba7477cb99585cddc78d5605fe0488779ceb179211f1ec5bc292787a9e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For procedures for preparing combined financial statements, see paragraph [810-10-45-10](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-10). ##### [810-958-60-7](https://asc.understandingaccounting.org/asc/810/958/#810-958-60-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:27.061Z to 2026-09-10T01:33:27.061Z Record version: sha256:ee664335f962a9062ac04dff48b5be59f5f2e76cd2564e88c07f630c84fdbda4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For parent-entity financial statements, see paragraph [810-10-45-11](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-11). #### Related Party Disclosures ##### [810-958-60-8](https://asc.understandingaccounting.org/asc/810/958/#810-958-60-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:27.061Z to 2026-09-10T01:33:27.061Z Record version: sha256:60eb7e8b308ac93f2a590f8b776e23e87f5a619898b25c6b37d7ce9669327c10 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For a definition of a related party and the required disclosures of material related party transactions, see Topic 850. ##### [810-958-60-9](https://asc.understandingaccounting.org/asc/810/958/#810-958-60-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:27.061Z to 2026-09-10T01:33:27.061Z Record version: sha256:88be3ceda785b57aaee0c398f52c72878d062bdc3670a5fc7c9ac4ebb8bd3c1b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [810-958-60-10](https://asc.understandingaccounting.org/asc/810/958/#810-958-60-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:27.061Z to 2026-09-10T01:33:27.061Z Record version: sha256:e1f51df2cc98eeb03afdc3ddedd172147217559425892954eff2a6ec7d45a8a4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [810-958-60-11](https://asc.understandingaccounting.org/asc/810/958/#810-958-60-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:27.061Z to 2026-09-10T01:33:27.061Z Record version: sha256:8795e891ad354679b70238f54706244711b6f906e839501541a75ec3a136b3aa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). Source downloaded (UTC): 2026-09-10T01:33:29.760Z to 2026-09-10T01:33:29.760Z Record version: sha256:7f62d39414c63ac2745312c6f01734d65995899b5fa160ac5d4e59ba089c897f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-958-65: 65 Transition and Open Effective Date Information [Read section](https://asc.understandingaccounting.org/asc/810/958/#65-transition-and-open-effective-date-information) SEC content: no ##### [810-958-65-1](https://asc.understandingaccounting.org/asc/810/958/#810-958-65-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:29.760Z to 2026-09-10T01:33:29.760Z Record version: sha256:f1226cc8c95c68cd0c1c5a28a4d6aacc013e5260e1aeed8ba1a5ccd341243c4b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 04/13/2010 after the end of the transition period stated in FASB Staff Position SOP 94-3-1 and AAG HCO-1, _Omnibus Changes to Consolidation and Equity Method Guidance for Not-for-Profit Organizations_. ##### [810-958-65-2](https://asc.understandingaccounting.org/asc/810/958/#810-958-65-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:29.760Z to 2026-09-10T01:33:29.760Z Record version: sha256:a45b592b64a34c56f4fad6f5b83aee5d48f4472be72f77afb18940a032dbd1d6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 06/20/2018 after the end of the transition period stated in Accounting Standards Update No. 2017-02, _Not-for-Profit Entities—Consolidation (Subtopic 958-810): Clarifying When a Not-for-Profit Entity That Is a General Partner or a Limited Partner Should Consolidate a For-Profit Limited Partnership or Similar Entity_.