# ASC Topic 810: Consolidation Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/810/) 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): 2026-09-10T01:28:43.316Z to 2026-09-10T01:34:48.416Z Record version: sha256:9d12552d745e4dfa05d8473c93f04b9932882f352911c9a7669e0223d72201cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## Machine-generated topic summary ASC 810 sets the framework for deciding when one reporting entity must present another legal entity's financial statements as its own. The core Subtopic, 810-10, requires a reporting entity first to test whether the other entity is a variable interest entity (810-10-15-14) — consolidated by the single primary beneficiary that has both power over the activities most significantly affecting economic performance and exposure to potentially significant losses or benefits (810-10-25-38A) — and only if it is not a VIE to apply the voting interest model (generally more than 50% of voting shares, or of kick-out rights for limited partnerships, per 810-10-15-8 and 15-8A) or the controlled-by-contract model. The remaining Subtopics either supply industry-specific overlays (proportionate/undivided-interest presentation for construction, mining, oil and gas, and real estate; the broker-dealer temporary-control exception; fair value rather than consolidation by investment companies; the NFP "control plus economic interest" model in 958-810; bank trust-preferred structures; regulated-affiliate intra-entity profit; time-sharing SPEs; sponsor-funded R&D arrangements in 810-30) or are shells whose paragraphs were superseded (810-20 limited partnerships by ASU 2015-02, 810-915 development stage entities by ASU 2014-10, 810-952 franchisors by ASU 2009-17). The single most important idea is that consolidation follows a controlling financial interest, tested VIE-first, with narrow industry exceptions to that general model. Source downloaded (UTC): 2026-09-10T01:28:43.316Z to 2026-09-10T01:29:44.246Z Record version: sha256:165badb9b018bc3b0f84d1b71b78a1d58535580bbfa43119fc24344486ad7cf2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-10: Consolidation — Overall ### Machine-generated study aids ```json { "summary": "ASC 810-10 sets out the pervasive framework for determining whether one reporting entity must consolidate another legal entity, and it is organized into three Subsections: General (voting interest model), Variable Interest Entities (VIE model), and Consolidation of Entities Controlled by Contract. Consolidation is required when a reporting entity has a \"controlling financial interest\" — usually ownership of a majority voting interest (or, for limited partnerships, a majority of kick-out rights through voting interests) under the General Subsections, or, for a VIE, both power over the activities that most significantly impact the VIE's economic performance and exposure to potentially significant losses/benefits. A reporting entity must first test whether the other entity is a VIE (810-10-15-14); only if it is not does the voting-interest or contractual-control analysis apply.", "key_points": [ "Consolidated financial statements are presumed more meaningful and are usually necessary for fair presentation when one entity directly or indirectly has a controlling financial interest in the others (810-10-10-1).", "Order of analysis: apply the VIE Subsections first if the entity is in their scope (810-10-15-3(a) and 810-10-15-14); if not a VIE, use only the General Subsections, or the Consolidation of Entities Controlled by Contract Subsections for contractual management relationships (810-10-15-3(b)-(c)).", "The usual condition for a controlling financial interest is ownership of more than 50 percent of outstanding voting shares (810-10-15-8), and for limited partnerships, ownership of more than 50 percent of kick-out rights through voting interests (810-10-15-8A); control may also exist by contract, lease, agreement, or court decree.", "A legal entity is a VIE if, by design, equity at risk is insufficient to finance activities without additional subordinated financial support, or the equity holders as a group lack power through voting rights, the obligation to absorb expected losses, or the right to receive expected residual returns, or if voting rights are disproportionate and substantially all activities are conducted on behalf of the disproportionately low-vote investor (810-10-15-14).", "The primary beneficiary consolidates a VIE; it is the single party with both (a) power to direct the activities that most significantly impact the VIE's economic performance and (b) the obligation to absorb potentially significant losses or right to receive potentially significant benefits (810-10-25-38A); if power is shared among unrelated parties, no party is the primary beneficiary (810-10-25-38D).", "A majority-owned subsidiary is not consolidated where control does not rest with the majority owner (legal reorganization, bankruptcy, severe foreign exchange restrictions, or substantive noncontrolling participating rights) (810-10-15-10(a)(1)); protective rights do not overcome the consolidation presumption but substantive participating rights do (810-10-25-7, 25-10, 25-11).", "Scope exceptions include employee benefit plans, investment company investees, governmental organizations, money market funds operating under Rule 2a-7-like requirements (810-10-15-12), NFPs, insurance separate accounts, pre-2003 entities where information is unobtainable, certain businesses (810-10-15-17), and a private company common-control accounting alternative (810-10-15-17AD)." ], "categories": [ "Consolidation", "Recognition", "Presentation", "Disclosure" ], "audience_level": "intermediate", "student_note": "This is the gateway subtopic for every consolidation question, and the most common mistake is jumping straight to the majority-voting-interest test — you must always screen for VIE status first, and remember that for limited partnerships the analogue of voting rights is kick-out rights. Also do not confuse protective rights (which never defeat consolidation) with substantive participating rights (which do).", "related_topics": [ "810-30", "958-810", "946-810", "323-10", "805", "850" ], "key_concepts": [ "controlling financial interest", "variable interest entity", "primary beneficiary", "equity investment at risk", "kick-out rights", "substantive participating rights", "power to direct significant activities", "voting interest model" ] } ``` Source downloaded (UTC): 2026-09-10T01:28:43.316Z to 2026-09-10T01:28:43.316Z Record version: sha256:a1186c62b67dcb38c7044a544e38dcb3ec77cf02da1c140fb6712c97b28e14f9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-10-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/810/10/#00-status) SEC content: no ##### [810-10-00-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:43.316Z to 2026-09-10T01:28:43.316Z Record version: sha256:267c52dcdfa3358d624c4c0c3e807e6da09d32c6719352db644119cb203c3566 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
AcquirerAmendedAccounting Standards Update No. 2025-0305/12/2025
Beneficial InterestsAddedAccounting Standards Update No. 2014-1308/05/2014
BusinessAmendedAccounting Standards Update No. 2017-0101/05/2017
BusinessAmendedAccounting Standards Update No. 2009-0207/01/2009
Business CombinationAmendedAccounting Standards Update No. 2010-0701/28/2010
Collateralized Financing EntityAddedAccounting Standards Update No. 2014-1308/05/2014
ContractAddedAccounting Standards Update No. 2014-0905/28/2014
Corporate Joint VentureAddedAccounting Standards Update No. 2023-0508/23/2023
CustomerAddedAccounting Standards Update No. 2014-0905/28/2014
Decision MakerAddedAccounting Standards Update No. 2015-0202/18/2015
Decision-Making AuthorityAddedAccounting Standards Update No. 2015-0202/18/2015
Development Stage EntitySupersededAccounting Standards Update No. 2014-1006/10/2014
Direct Financing LeaseAmendedAccounting Standards Update No. 2021-0507/19/2021
Direct Financing LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Expected Cash FlowAddedAccounting Standards Update No. 2024-0203/29/2024
Expected Losses and Expected Residual ReturnsAmendedAccounting Standards Update No. 2024-0203/29/2024
Fair Value (3rd def.)AddedAccounting Standards Update No. 2012-0410/01/2012
Finance LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Financial Asset (2nd def.)AmendedAccounting Standards Update No. 2016-1912/14/2016
Financial Statements Are Available to Be IssuedSupersededAccounting Standards Update No. 2016-0303/07/2016
Financial Statements Are Available to Be IssuedAddedAccounting Standards Update No. 2014-0703/20/2014
InventoryAddedAccounting Standards Update No. 2016-1610/24/2016
Joint VentureAddedAccounting Standards Update No. 2023-0508/23/2023
Kick-Out Rights (1st def.)SupersededAccounting Standards Update No. 2015-0202/18/2015
Kick-Out Rights (VIE definition)AddedAccounting Standards Update No. 2015-0202/18/2015
Kick-Out Rights (2nd def.)SupersededAccounting Standards Update No. 2015-0202/18/2015
Kick-Out Rights (Voting Interest Entity definition)AddedAccounting Standards Update No. 2015-0202/18/2015
Kick-out RightsAddedAccounting Standards Update No. 2009-1712/23/2009
LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Lease PaymentsAddedAccounting Standards Update No. 2016-0202/25/2016
LesseeAddedAccounting Standards Update No. 2016-0202/25/2016
LessorAddedAccounting Standards Update No. 2016-0202/25/2016
Nonfinancial AssetAddedAccounting Standards Update No. 2014-1308/05/2014
Nonprofit ActivityAddedAccounting Standards Update No. 2010-0201/06/2010
Nonreciprocal TransferAddedMaintenance Update 2014-20 (PDF)09/29/2014
Operating LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Ordinary Course of BusinessAddedAccounting Standards Update No. 2015-0202/18/2015
OwnersAmendedAccounting Standards Update No. 2010-0701/28/2010
Participating Rights (1st def.)SupersededAccounting Standards Update No. 2015-0202/18/2015
Participating Rights (VIE definition)AddedAccounting Standards Update No. 2015-0202/18/2015
Participating Rights (2nd def.)SupersededAccounting Standards Update No. 2015-0202/18/2015
Participating Rights (Voting Interest Entity definition)AddedAccounting Standards Update No. 2015-0202/18/2015
Participating RightsAddedAccounting Standards Update No. 2009-1712/23/2009
Primary BeneficiaryAmendedMaintenance Update 2018-02 (PDF)02/02/2018
Primary BeneficiaryAmendedAccounting Standards Update No. 2009-1712/23/2009
Private CompanyAddedAccounting Standards Update No. 2014-0703/20/2014
Protective Rights (1st def.)SupersededAccounting Standards Update No. 2015-0202/18/2015
Protective Rights (VIE definition)AddedAccounting Standards Update No. 2015-0202/18/2015
Protective Rights (2nd def.)SupersededAccounting Standards Update No. 2015-0202/18/2015
Protective Rights (Voting Interest Entity definition)AddedAccounting Standards Update No. 2015-0202/18/2015
Protective RightsAddedAccounting Standards Update No. 2009-1712/23/2009
Public Business EntityAmendedMaintenance Update 2017-06 (PDF)04/07/2017
Public Business EntityAmendedMaintenance Update 2016-11 (PDF)06/27/2016
Public Business EntityAddedAccounting Standards Update No. 2014-0703/20/2014
Qualifying Special-Purpose EntitySupersededAccounting Standards Update No. 2009-1612/23/2009
ReinsuranceAddedAccounting Standards Update No. 2016-1912/14/2016
Related PartiesAddedAccounting Standards Update No. 2010-1002/25/2010
RevenueAddedAccounting Standards Update No. 2014-0905/28/2014
Reverse AcquisitionAddedAccounting Standards Update No. 2025-0305/12/2025
Sales-Type LeaseAmendedAccounting Standards Update No. 2021-0507/19/2021
Sales-Type LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Underlying AssetAddedAccounting Standards Update No. 2016-0202/25/2016
With CauseAddedAccounting Standards Update No. 2015-0202/18/2015
Without CauseAddedAccounting Standards Update No. 2015-0202/18/2015
810-10-05-2AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-05-3AddedAccounting Standards Update No. 2015-0202/18/2015
810-10-05-5SupersededAccounting Standards Update No. 2015-0202/18/2015
810-10-05-6AmendedMaintenance Update 2020-18 (PDF)11/25/2020
810-10-05-6AddedAccounting Standards Update No. 2015-0202/18/2015
810-10-05-8AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-05-8AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-05-8AAddedAccounting Standards Update No. 2009-1712/23/2009
810-10-05-9AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-05-10AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-05-10AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-05-11AmendedAccounting Standards Update No. 2016-1912/14/2016
810-10-05-13AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-15-3AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-15-3AmendedAccounting Standards Update No. 2010-0802/02/2010
810-10-15-8AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-15-8AAddedAccounting Standards Update No. 2015-0202/18/2015
810-10-15-10AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-15-10AmendedAccounting Standards Update No. 2013-0806/07/2013
810-10-15-10AmendedAccounting Standards Update No. 2010-0802/02/2010
810-10-15-12 through 15-14
AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-15-12AmendedAccounting Standards Update No. 2013-0806/07/2013
810-10-15-12AmendedAccounting Standards Update No. 2009-1612/23/2009
810-10-15-13AAddedAccounting Standards Update No. 2009-1712/23/2009
810-10-15-13BAddedAccounting Standards Update No. 2009-1712/23/2009
810-10-15-14AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-15-14AmendedAccounting Standards Update No. 2010-0802/02/2010
810-10-15-16SupersededAccounting Standards Update No. 2014-1006/10/2014
810-10-15-17AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-15-17ASupersededAccounting Standards Update No. 2016-0303/07/2016
810-10-15-17A through 15-17C
AddedAccounting Standards Update No. 2014-0703/20/2014
810-10-15-17AA through 15-17CSupersededAccounting Standards Update No. 2018-1710/31/2018
810-10-15-17AAAddedAccounting Standards Update No. 2016-0303/07/2016
810-10-15-17ABAddedAccounting Standards Update No. 2016-0303/07/2016
810-10-15-17AC through 15-17AFAddedAccounting Standards Update No. 2018-1710/31/2018
810-10-15-17BAmendedAccounting Standards Update No. 2016-0303/07/2016
810-10-15-17CAmendedAccounting Standards Update No. 2016-0303/07/2016
810-10-15-17DAddedAccounting Standards Update No. 2014-1308/05/2014
810-10-15-21AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-15-22AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-25-1AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-25-1AAddedAccounting Standards Update No. 2015-0202/18/2015
810-10-25-2 through 25-14
AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-25-2 through 25-7
AmendedAccounting Standards Update No. 2010-0802/02/2010
810-10-25-9 through 25-14
AmendedAccounting Standards Update No. 2010-0802/02/2010
810-10-25-14A through 25-14C
AddedAccounting Standards Update No. 2015-0202/18/2015
810-10-25-15AmendedAccounting Standards Update No. 2013-0806/07/2013
810-10-25-20AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-25-21AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-25-22AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-25-36 through 25-38
AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-25-38AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-25-38A through 25-38G
AddedAccounting Standards Update No. 2009-1712/23/2009
810-10-25-38CAmendedMaintenance Update 2016-05 (PDF)04/12/2016
810-10-25-38H through 25-38J
AddedAccounting Standards Update No. 2015-0202/18/2015
810-10-25-39 through 25-41
SupersededAccounting Standards Update No. 2009-1712/23/2009
810-10-25-42AmendedAccounting Standards Update No. 2016-1710/26/2016
810-10-25-42 through 25-44
AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-25-43AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-25-44AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-25-44AAddedAccounting Standards Update No. 2015-0202/18/2015
810-10-25-44BAmendedAccounting Standards Update No. 2023-0203/29/2023
810-10-25-44BAddedAccounting Standards Update No. 2015-0202/18/2015
810-10-25-48SupersededAccounting Standards Update No. 2014-0703/20/2014
810-10-25-52AmendedAccounting Standards Update No. 2014-0703/20/2014
810-10-25-53AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-25-54AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-25-54AmendedAccounting Standards Update No. 2014-0703/20/2014
810-10-25-54AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-25-56AmendedAccounting Standards Update No. 2016-0202/25/2016
810-10-25-66AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-30-2AmendedAccounting Standards Update No. 2025-0305/12/2025
810-10-30-2AmendedAccounting Standards Update No. 2009-0207/01/2009
810-10-30-3AAddedAccounting Standards Update No. 2025-0811/12/2025
810-10-30-4AmendedAccounting Standards Update No. 2009-0207/01/2009
810-10-30-5AddedAccounting Standards Update No. 2023-0508/23/2023
810-10-30-6AmendedAccounting Standards Update No. 2009-0207/01/2009
810-10-30-7AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-30-8AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-30-8A through 30-8D
AddedAccounting Standards Update No. 2009-1712/23/2009
810-10-30-8CAmendedAccounting Standards Update No. 2016-1306/16/2016
810-10-30-9AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-30-10 through 30-16
AddedAccounting Standards Update No. 2014-1308/05/2014
810-10-35-4AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-35-5SupersededAccounting Standards Update No. 2009-1712/23/2009
810-10-35-6 through 35-9
AddedAccounting Standards Update No. 2014-1308/05/2014
810-10-40-3AAmendedAccounting Standards Update No. 2017-0502/22/2017
810-10-40-3AAmendedAccounting Standards Update No. 2014-0905/28/2014
810-10-40-3AAddedAccounting Standards Update No. 2010-0201/06/2010
810-10-40-3BSupersededAccounting Standards Update No. 2017-0502/22/2017
810-10-40-3BAmendedAccounting Standards Update No. 2014-0905/28/2014
810-10-40-3BAddedAccounting Standards Update No. 2011-1012/14/2011
810-10-40-4AmendedAccounting Standards Update No. 2013-0503/04/2013
810-10-40-4AmendedAccounting Standards Update No. 2010-0201/06/2010
810-10-40-4AAddedAccounting Standards Update No. 2013-0503/04/2013
810-10-40-5AmendedMaintenance Update 2014-20 (PDF)09/29/2014
810-10-40-5AmendedAccounting Standards Update No. 2010-0201/06/2010
810-10-45-8AmendedAccounting Standards Update No. 2016-1610/24/2016
810-10-45-16AmendedAccounting Standards Update No. 2010-0701/28/2010
810-10-45-21AAmendedAccounting Standards Update No. 2017-0502/22/2017
810-10-45-21AAmendedAccounting Standards Update No. 2014-0905/28/2014
810-10-45-21AAddedAccounting Standards Update No. 2010-0201/06/2010
810-10-45-25AddedAccounting Standards Update No. 2009-1712/23/2009
810-10-50-1AmendedMaintenance Update 2016-11 (PDF)06/27/2016
810-10-50-1AAmendedAccounting Standards Update No. 2015-0101/09/2015
810-10-50-1BAmendedAccounting Standards Update No. 2024-0311/04/2024
810-10-50-1BAmendedAccounting Standards Update No. 2010-0201/06/2010
810-10-50-2ASupersededAccounting Standards Update No. 2009-1712/23/2009
810-10-50-2AA through 50-2ACAddedAccounting Standards Update No. 2009-1712/23/2009
810-10-50-2AD through 50-2AFSupersededAccounting Standards Update No. 2018-1710/31/2018
810-10-50-2ADAmendedAccounting Standards Update No. 2016-0303/07/2016
810-10-50-2ADAmendedAccounting Standards Update No. 2016-0202/25/2016
810-10-50-2AD through 50-2AFAddedAccounting Standards Update No. 2014-0703/20/2014
810-10-50-2AFAmendedAccounting Standards Update No. 2016-0202/25/2016
810-10-50-2AG through 50-2AIAddedAccounting Standards Update No. 2018-1710/31/2018
810-10-50-3AmendedAccounting Standards Update No. 2025-1112/08/2025
810-10-50-3AmendedAccounting Standards Update No. 2024-0311/04/2024
810-10-50-3AmendedAccounting Standards Update No. 2012-0410/01/2012
810-10-50-3AmendedAccounting Standards Update No. 2009-0207/01/2009
810-10-50-3AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-50-4AmendedAccounting Standards Update No. 2025-1112/08/2025
810-10-50-4AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-50-5SupersededAccounting Standards Update No. 2009-1712/23/2009
810-10-50-5AAmendedAccounting Standards Update No. 2025-1112/08/2025
810-10-50-5AAmendedAccounting Standards Update No. 2014-0703/20/2014
810-10-50-5AAddedAccounting Standards Update No. 2009-1712/23/2009
810-10-50-5BAddedAccounting Standards Update No. 2009-1712/23/2009
810-10-50-6AmendedAccounting Standards Update No. 2025-1112/08/2025
810-10-50-6AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-50-7SupersededAccounting Standards Update No. 2009-1712/23/2009
810-10-50-8SupersededAccounting Standards Update No. 2009-1712/23/2009
810-10-50-9AmendedAccounting Standards Update No. 2025-1112/08/2025
810-10-50-9AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-50-10AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-50-11 through 50-19
SupersededAccounting Standards Update No. 2009-1712/23/2009
810-10-50-15AmendedAccounting Standards Update No. 2010-0802/02/2010
810-10-50-20 through 50-22
AddedAccounting Standards Update No. 2014-1308/05/2014
810-10-50-21AmendedAccounting Standards Update No. 2025-1112/08/2025
810-10-55-1AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-55-1AmendedAccounting Standards Update No. 2010-0802/02/2010
810-10-55-4CAmendedAccounting Standards Update No. 2016-1408/18/2016
810-10-55-4CAmendedAccounting Standards Update No. 2010-0701/28/2010
810-10-55-4EAmendedAccounting Standards Update No. 2016-1408/18/2016
810-10-55-4EAmendedAccounting Standards Update No. 2010-0701/28/2010
810-10-55-4JAmendedAccounting Standards Update No. 2012-0410/01/2012
810-10-55-4KAmendedAccounting Standards Update No. 2012-0410/01/2012
810-10-55-4LAmendedAccounting Standards Update No. 2011-0506/16/2011
810-10-55-4MAmendedAccounting Standards Update No. 2012-0410/01/2012
810-10-55-4N through 55-4W
AddedAccounting Standards Update No. 2015-0202/18/2015
810-10-55-5 through 55-8
SupersededAccounting Standards Update No. 2009-1712/23/2009
810-10-55-8AAmendedMaintenance Update 2018-12 (PDF)09/10/2018
810-10-55-8A through 55-8H
AddedAccounting Standards Update No. 2015-0202/18/2015
810-10-55-9SupersededAccounting Standards Update No. 2018-1710/31/2018
810-10-55-9AmendedAccounting Standards Update No. 2016-0303/07/2016
810-10-55-9AddedAccounting Standards Update No. 2014-0703/20/2014
810-10-55-9AmendedAccounting Standards Update No. 2009-0207/01/2009
810-10-55-16AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-55-17AmendedAccounting Standards Update No. 2012-0410/01/2012
810-10-55-21AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-55-24AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-55-28 through 55-30
AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-55-33 through 55-36
SupersededAccounting Standards Update No. 2009-1712/23/2009
810-10-55-37AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-55-37AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-55-37AmendedAccounting Standards Update No. 2010-1002/25/2010
810-10-55-37ASupersededAccounting Standards Update No. 2015-0202/18/2015
810-10-55-37AAddedAccounting Standards Update No. 2010-1002/25/2010
810-10-55-37B through 55-37D
AddedAccounting Standards Update No. 2015-0202/18/2015
810-10-55-37DAmendedAccounting Standards Update No. 2018-1710/31/2018
810-10-55-38AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-55-38AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-55-40AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-55-41AmendedAccounting Standards Update No. 2009-1612/23/2009
810-10-55-50AmendedAccounting Standards Update No. 2016-0202/25/2016
810-10-55-50AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-55-56AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-55-78 through 55-80
AmendedAccounting Standards Update No. 2016-0202/25/2016
810-10-55-87 through 55-89
SupersededAccounting Standards Update No. 2014-0703/20/2014
810-10-55-90 through 55-92Moved to
810-10-55-206 through 55-209
Accounting Standards Update No. 2009-1712/23/2009
810-10-55-93AmendedAccounting Standards Update No. 2016-0202/25/2016
810-10-55-93 through 55-95
AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-55-93 through 55-205
AddedAccounting Standards Update No. 2009-1712/23/2009
810-10-55-101AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-55-103AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-55-108AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-55-113AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-55-116AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-55-120AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-55-121AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-55-123AmendedAccounting Standards Update No. 2012-0410/01/2012
810-10-55-126AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-55-128AmendedAccounting Standards Update No. 2012-0410/01/2012
810-10-55-129AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-55-132AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-55-133AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-55-140AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-55-142AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-55-145AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-55-146AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-55-154AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-55-158AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-55-164AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-55-166AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-55-170AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-55-172 through 55-176
AmendedAccounting Standards Update No. 2016-0202/25/2016
810-10-55-178AmendedAccounting Standards Update No. 2016-0202/25/2016
810-10-55-182AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-55-203AmendedMaintenance Update 2016-05 (PDF)04/12/2016
810-10-55-205A through 55-205K
Moved to 810-10-55-205AJ through 55-205ATAccounting Standards Update No. 2015-0202/18/2015
810-10-55-205A through 55-205I
AddedAccounting Standards Update No. 2014-0703/20/2014
810-10-55-205JAddedAccounting Standards Update No. 2014-1308/05/2014
810-10-55-205KAddedAccounting Standards Update No. 2014-1308/05/2014
810-10-55-205L through 55-205AIAddedAccounting Standards Update No. 2015-0202/18/2015
810-10-55-205AJ through 55-205ARSupersededAccounting Standards Update No. 2018-1710/31/2018
810-10-55-205AJ through 55-205ARAmendedAccounting Standards Update No. 2016-0303/07/2016
810-10-55-205AJ through 55-205ATMoved from
810-10-55-205A through 55-205K
Accounting Standards Update No. 2015-0202/18/2015
810-10-55-205AU through 55-205BFAddedAccounting Standards Update No. 2018-1710/31/2018
810-10-60-4AmendedAccounting Standards Update No. 2016-0202/25/2016
810-10-60-6SupersededAccounting Standards Update No. 2009-1612/23/2009
810-10-60-7SupersededAccounting Standards Update No. 2009-1612/23/2009
810-10-65-1AmendedAccounting Standards Update No. 2009-1712/23/2009
810-10-65-1AmendedAccounting Standards Update No. 2010-0701/28/2010
810-10-65-2AmendedAccounting Standards Update No. 2015-0202/18/2015
810-10-65-2AmendedAccounting Standards Update No. 2013-0806/07/2013
810-10-65-2AmendedAccounting Standards Update No. 2010-1002/25/2010
810-10-65-2AddedAccounting Standards Update No. 2009-1712/23/2009
810-10-65-3AddedAccounting Standards Update No. 2010-0201/06/2010
810-10-65-4AmendedAccounting Standards Update No. 2016-0303/07/2016
810-10-65-4AddedAccounting Standards Update No. 2014-0703/20/2014
810-10-65-5AmendedMaintenance Update 2018-02 (PDF)02/02/2018
810-10-65-5AddedAccounting Standards Update No. 2014-1006/10/2014
810-10-65-6AddedAccounting Standards Update No. 2014-1308/05/2014
810-10-65-7AddedAccounting Standards Update No. 2015-0202/18/2015
810-10-65-8AddedAccounting Standards Update No. 2016-1710/26/2016
810-10-65-9AddedAccounting Standards Update No. 2018-1710/31/2018
Source downloaded (UTC): 2026-09-10T01:28:45.083Z to 2026-09-10T01:28:45.083Z Record version: sha256:e5c60c342d75ab99c62607170897b53b04ea7413d043ab0e0b3470e84c018928 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-10-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/810/10/#05-overview-and-background) SEC content: no ##### [810-10-05-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:45.083Z to 2026-09-10T01:28:45.083Z Record version: sha256:dfe90603c2abda8bd2eca464b230900e7c299ac9701b8fa1fb1ad9558c695eca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Consolidation Topic provides guidance on entities subject to consolidation as well as on how to consolidate. Paragraph [810-10-10-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-10-1) discusses the objectives of consolidation. ##### [810-10-05-2](https://asc.understandingaccounting.org/asc/810/10/#810-10-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:45.083Z to 2026-09-10T01:28:45.083Z Record version: sha256:30982ce8387cfc033acce30430c55559626c0998c006e4b3db9321dc01364e45 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Topic includes the following Subtopics: 1. a Overall 2. b [Subparagraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). 3. c Research and Development Arrangements. ##### [810-10-05-3](https://asc.understandingaccounting.org/asc/810/10/#810-10-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:45.083Z to 2026-09-10T01:28:45.083Z Record version: sha256:08061fee318c9a7772bacd5470133a7720c9febf7842844fc0d915407c7c4c1a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Throughout this Subtopic, any reference to 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.") includes limited partnerships 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 such entities, a managing member is the functional equivalent of a general partner, and a nonmanaging member is the functional equivalent of a limited partner. ##### [810-10-05-4](https://asc.understandingaccounting.org/asc/810/10/#810-10-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:45.083Z to 2026-09-10T01:28:45.083Z Record version: sha256:9d7af402da9f6f5149428c5099123ab74905604c0a9f1f0537063a20bbd7efb0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic is presented in the following three Subsections: 1. a General 2. b Variable Interest Entities 3. c Consolidation of Entities Controlled by Contract ##### [810-10-05-5](https://asc.understandingaccounting.org/asc/810/10/#810-10-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:45.083Z to 2026-09-10T01:28:45.083Z Record version: sha256:e8212db5dbf3d271d58f5dd0e2a12b7c7bce8764d34ef961f64f44a157f96d7f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-10-05-6](https://asc.understandingaccounting.org/asc/810/10/#810-10-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:45.083Z to 2026-09-10T01:28:45.083Z Record version: sha256:9832a96a7599f2b3f618b6c0801d70faa6607961d3cb99e49ac1696b6ff1d930 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following flowchart provides an overview of the guidance in this Subtopic for evaluating whether a reporting entity should consolidate another legal entity. The flowchart does not include all of the guidance in this Subtopic and is not intended as a substitute for the guidance in this Subtopic. For example, the flowchart does not illustrate the consolidation analysis for entities controlled by contract. - ![](https://asc.understandingaccounting.org/asc-img/GUID-82A35722-010F-477A-B04F-350A446AFFFE-low.gif)![](https://asc.understandingaccounting.org/asc-img/GUID-4D1EDBEF-7A8B-4991-A46F-4E3CAFD0C33C-low.gif)![](https://asc.understandingaccounting.org/asc-img/GUID-EC931A92-4588-4A0C-B38A-8111AAE02555-low.gif) Text only report Displayed Text Consolidation Analysis in Subtopic 810-10 "Does a Variable Interest Entities (VIE) Subsection scope exception apply? (810-10-15-17)" "Does a scope exception from the consolidation guidance apply? (810-10-15-12)" NO "Does the reporting entity have a variable interest in the legal entity? (810-10-55-16 through 55-41)" NO "Is the legal entity a VIE?2 (810-10-15-14)" YES YES YES NO NO YES Stop consolidation analysis1 "Is the entity being evaluated for consolidation a legal entity? (810-10-15-4)" YES Stop consolidation analysis1 NO Evaluation under Voting Interest Model Evaluation under Variable Interest Model "1Consolidation not required; however, evaluation of other generally accepted accounting principles (GAAP) may be relevant to determine recognition, measurement, or disclosure. 2A legal entity is a VIE if any of the following conditions exist: a. The equity investment at risk is not sufficient to finance the activities of the entity without additional subordinated financial support provided by any parties. b. As a group, the holders of the equity investment at risk lack any of the following characteristics of a controlling financial interest: 1. The power to direct the activities that most significantly impact the entity's economic performance: i. For legal entities other than limited partnerships, investors lack that power through voting rights or similar rights if no owners hold voting rights or similar rights (such as those of a common shareholder in a corporation). ii. For limited partnerships, partners lack that power if neither (01) nor (02) below exists: 01. A simple majority or lower threshold of limited partners (including a single limited partner) with equity at risk is able to exercise substantive kick-out rights through voting interests over the general partner(s). 02. Limited partners with equity at risk are able to exercise substantive participating rights over the general partner(s). 2. The obligation to absorb expected losses. 3. The right to receive expected residual returns. c. The equity investors' voting rights are not proportional to the economics, and substantially all of the activities of the entity either involve or are conducted on behalf of an investor that has disproportionately few voting rights." "Evaluation under Voting Interest Model" Stop consolidation analysis1 3 Power is defined as the power to direct the activities of a VIE that most significantly impact the VIE's economic performance. "Does the reporting entity, on a direct basis, have power3 and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE? (810-10-25-38A through 25-38J and 810-10-25-42)" "Are one or more related parties under common control with the single decision maker and, as a group, do they have power and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE? (810-10-25-44A)" Consolidate entity Consolidate entity YES NO YES "Is there a single decision maker or is power shared? (810-10-25-44)" NO "Single Decision Maker" Perform related party tie breaker test (810-10-25-44)—party most closely associated with VIE consolidates entity NO "As a group, do the reporting entity and its related parties (including de facto agents) have power3 and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE?" YES Shared Power NO Single variable interest holder (not the decision maker) consolidates Stop consolidation analysis1 YES "Evaluation under Variable Interest Model" "Are substantially all of the activities of the VIE conducted on behalf of a single variable interest holder (not the decision maker)? (810-10-25-44B)" "As a group, do the reporting entity and its related parties (including de facto agents) have power3 and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE?" "Does the reporting entity, on a direct and indirect basis, have power3 and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE? (810-10-25-38A through 25-38J and 810-10-25-42)" Perform related party tie breaker test (810-10-25-44)—party most closely associated with VIE consolidates entity YES Stop consolidation analysis1 NO YES Stop consolidation analysis1 NO "For legal entities other than limited partnerships, does the reporting entity own a majority voting interest? (810-10-25-1) For limited partnerships, does the reporting entity own a majority of the limited partnership's kick-out rights through voting interests? (810-10-25-1A)" "Evaluation under Voting Interest Model" YES "Do noncontrolling shareholders or partners hold substantive participating rights? (810-10-25-2 through 25-13A) OR Do other conditions exist (subsidiary in bankruptcy, legal reorganization, etc.) that would indicate that control does not rest with the reporting entity? (810-10-15-10(a))" NO Stop consolidation analysis1 Consolidate entity YES NO Stop consolidation analysis1 ##### [810-10-05-7](https://asc.understandingaccounting.org/asc/810/10/#810-10-05-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:45.083Z to 2026-09-10T01:28:45.083Z Record version: sha256:201e59247c11455121c36a6959f8c61b3b54631b2cc9ee37a841a3932b7d3c34 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ### Variable Interest Entities #### Consolidation of VIEs ##### [810-10-05-8](https://asc.understandingaccounting.org/asc/810/10/#810-10-05-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:45.083Z to 2026-09-10T01:28:45.083Z Record version: sha256:8c82c8f5e1e02b140f0f4988ff45fce72434a44fbed486e6c78c73caa0a1459b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Variable Interest Entities Subsections clarify the application of the General Subsections to certain [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.") in which equity investors do not have sufficient equity at risk for the legal entity to finance its activities without additional [subordinated financial support](https://asc.understandingaccounting.org/glossary/s/#subordinated-financial-support "Variable interests that will absorb some or all of a variable interest entity's (VIE's) expected losses.") or, as a group, the holders of the equity investment at risk lack any one of the following three characteristics: 1. a The power, through voting rights or similar rights, to direct the activities of a legal entity that most significantly impact the entity's economic performance 2. b The obligation to absorb the [expected losses](https://asc.understandingaccounting.org/glossary/e/#expected-losses "A legal entity that has no history of net losses and expects to continue to be profitable in the foreseeable future can be a variable interest entity (VIE). A legal entity that expects to be profitable will have expected losses. A VIE's expected losses are the expected negative variability in the fair value of its net assets exclusive of variable interests and not the anticipated amount or variability of the net income or loss.") of the legal entity 3. c The right to receive the [expected residual returns](https://asc.understandingaccounting.org/glossary/e/#expected-residual-returns "A variable interest entity's (VIE's) expected residual returns are the expected positive variability in the fair value of its net assets exclusive of variable interests.") of the legal entity. Paragraph [810-10-10-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-10-1) states that consolidated financial statements are usually necessary for a fair presentation if one of the entities in the [consolidated group](https://asc.understandingaccounting.org/glossary/c/#consolidated-group "A parent and all its subsidiaries.") directly or indirectly has a controlling financial interest in the other entities. For legal entities other than limited partnerships, paragraph [810-10-15-8](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-8) states that the usual condition for a controlling financial interest is ownership of a majority voting interest. For limited partnerships, paragraph [810-10-15-8A](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-8A) states that the usual condition for a controlling financial interest is ownership of a majority of the limited partnership's [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.") through voting interests. However, application of the majority voting interest and kick-out rights requirements in the General Subsections of this Subtopic to certain types of entities may not identify the party with a controlling financial interest because the controlling financial interest may be achieved through arrangements that do not involve voting interests or kick-out rights. ##### [810-10-05-8A](https://asc.understandingaccounting.org/asc/810/10/#810-10-05-8A) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:45.083Z to 2026-09-10T01:28:45.083Z Record version: sha256:45ffdce5f82c8b85b4080f66adf9e93d996f2910f6c00af4ee4a1dbcea8e9758 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The reporting entity with a variable interest or interests that provide the reporting entity with a controlling financial interest in a [variable interest entity](https://asc.understandingaccounting.org/glossary/v/#variable-interest-entity "A legal entity subject to consolidation according to the provisions of the Variable Interest Entities Subsections of Subtopic 810-10.") (VIE) will have both of the following characteristics: 1. a The power to direct the activities of a VIE that most significantly impact the VIE's economic performance 2. b The obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. ##### [810-10-05-9](https://asc.understandingaccounting.org/asc/810/10/#810-10-05-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:45.083Z to 2026-09-10T01:28:45.083Z Record version: sha256:e74691551b4e537d54acd0bf4ed867f8556e20086020530d1fadded6b3b69ab1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Variable Interest Entities Subsections explain how to identify VIEs and how to determine when a reporting entity should include the assets, liabilities, [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."), and results of activities of a VIE in its consolidated financial statements. Transactions involving VIEs are common. Some reporting entities have entered into arrangements using VIEs that appear to be designed to avoid reporting assets and liabilities for which they are responsible, to delay reporting losses that have already been incurred, or to report gains that are illusory. At the same time, many reporting entities have used VIEs for valid business purposes and have properly accounted for those VIEs based on guidance and accepted practice. ##### [810-10-05-10](https://asc.understandingaccounting.org/asc/810/10/#810-10-05-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:45.083Z to 2026-09-10T01:28:45.083Z Record version: sha256:fdae94658d28fd2a97aedcfdac2589125d498fd7fb2f84194a487e451d3cb758 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some relationships between reporting entities and VIEs are similar to relationships established by majority voting interests, but VIEs often are arranged without a governing board or with a governing board that has limited ability to make decisions that affect the VIE's activities. A VIE's activities may be limited or predetermined by the articles of incorporation, bylaws, partnership agreements, trust agreements, other establishing documents, or contractual agreements between the parties involved with the VIE. A reporting entity implicitly chooses at the time of its investment to accept the activities in which the VIE is permitted to engage. That reporting entity may not need the ability to make decisions if the activities are predetermined or limited in ways the reporting entity chooses to accept. Alternatively, the reporting entity may obtain an ability to make decisions that affect a VIE's activities through contracts or the VIE's governing documents. There may be other techniques for protecting a reporting entity's interests. In any case, the reporting entity may receive benefits similar to those received from a controlling financial interest and be exposed to risks similar to those received from a controlling financial interest without holding a majority voting interest (or without holding any voting interest). The power to direct the activities of a VIE that most significantly impact the entity's economic performance and the reporting entity's exposure to the entity's losses or benefits are determinants of consolidation in the Variable Interest Entities Subsections. The Variable Interest Entities Subsections also provide guidance on determining whether fees paid to a [decision maker](https://asc.understandingaccounting.org/glossary/d/#decision-maker "An entity or entities with the power to direct the activities of another legal entity that most significantly impact the legal entity's economic performance according to the provisions of the Variable Interest Entities Subsections of Subtopic 810-10.") or service provider should be considered a variable interest in a VIE. ##### [810-10-05-11](https://asc.understandingaccounting.org/asc/810/10/#810-10-05-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:45.083Z to 2026-09-10T01:28:45.083Z Record version: sha256:1aa895550fe17912ee765e81ca59e5a5698a81dc18adff89cd2051f9bbf0ccb8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. VIEs often are created for a single specified purpose, for example, to facilitate securitization, leasing, hedging, research and development, [reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "A transaction in which a reinsurer (assuming entity), for a consideration (premium), assumes all or part of a risk undertaken originally by another insurer (ceding entity). For indemnity reinsurance, the legal rights of the insured are not affected by the reinsurance transaction and the insurance entity issuing the insurance contract remains liable to the insured for payment of policy benefits. Assumption or novation reinsurance contracts that are legal replacements of one insurer by another extinguish the ceding entity's liability to the policyholder."), or other transactions or arrangements. The activities may be predetermined by the documents that establish the VIEs or by contracts or other arrangements between the parties involved. However, those characteristics do not define the scope of the Variable Interest Entities Subsections because other entities may have those same characteristics. The distinction between VIEs and other entities is based on the nature and amount of the equity investment and the rights and obligations of the equity investors. ##### [810-10-05-12](https://asc.understandingaccounting.org/asc/810/10/#810-10-05-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:45.083Z to 2026-09-10T01:28:45.083Z Record version: sha256:f8294e901276766806b11b82aedc15990a52cc6f20e2a572a00ddb1d13b2a89d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because the equity investors in an entity other than a VIE generally absorb losses first, they can be expected to resist arrangements that give other parties the ability to significantly increase their risk or reduce their benefits. Other parties can be expected to align their interests with those of the equity investors, protect their interests contractually, or avoid any involvement with the entity. ##### [810-10-05-13](https://asc.understandingaccounting.org/asc/810/10/#810-10-05-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:45.083Z to 2026-09-10T01:28:45.083Z Record version: sha256:443e25b74d4841aeb17beaef8975559430170a5064e521f2602b609e73fab81a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In contrast, either a VIE does not issue voting interests (or other interests with similar rights) or the total equity investment at risk is not sufficient to permit the legal entity to finance its activities without additional subordinated financial support. If a legal entity does not issue voting or similar interests or if the equity investment is insufficient, that legal entity's activities may be predetermined or decision-making ability is determined contractually. If the total equity investment at risk is not sufficient to permit the legal entity to finance its activities, the parties providing the necessary additional subordinated financial support most likely will not permit an equity investor to make decisions that may be counter to their interests. That means that the usual condition for establishing a controlling financial interest as a majority voting interest does not apply to VIEs. Consequently, a consolidation analysis that focuses on ownership of voting stock is not appropriate for such entities. ### Consolidation of Entities Controlled by Contract ##### [810-10-05-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-05-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:45.083Z to 2026-09-10T01:28:45.083Z Record version: sha256:ba7dc734ec80cd6fc68c1c71ad40d28abf805d451a5aef14528befaf6a202f69 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Consolidation of Entities Controlled by Contract Subsections provide guidance on the consolidation of entities controlled by contract that are not determined to be [variable interest entities](https://asc.understandingaccounting.org/glossary/v/#variable-interest-entity "A legal entity subject to consolidation according to the provisions of the Variable Interest Entities Subsections of Subtopic 810-10.") (VIEs) (see the [Variable Interest Entities Subsection](https://asc.understandingaccounting.org/asc/810/10/#15-scope-and-scope-exceptions) of Section 810-10-15). As indicated in paragraph [810-10-15-19](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-19), the guidance in the Consolidation of Entities Controlled by Contract Subsections is to be applied to all entities controlled by contract, despite the fact that the context of the guidance is physician practice management entities. ##### [810-10-05-15](https://asc.understandingaccounting.org/asc/810/10/#810-10-05-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:45.083Z to 2026-09-10T01:28:45.083Z Record version: sha256:a39400372c4933355cceb84095bc0778201f134ad8f3a795ef5e7297dcb27a5f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Contractual arrangements between entities that are in business to practice and dispense medicine (physician practices) and entities that are in business to manage the operations of those physician practices (physician practice management entities) are becoming increasingly common. The structure of those arrangements takes various forms, provides for varying degrees of participation in the management of the physician practice by the physician practice management entity, and provides for various financial arrangements. ##### [810-10-05-16](https://asc.understandingaccounting.org/asc/810/10/#810-10-05-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:45.083Z to 2026-09-10T01:28:45.083Z Record version: sha256:737e55816b817e27df28bd402dac6475551cc77efafccc80f98f2c185cb44194 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Many of the arrangements between physician practices and physician practice management entities arise when the physician practice management entity seeks to acquire the physician practice. Legal or business reasons often preclude the physician practice management entity from acquiring the physician practice's outstanding equity instruments and, if that is the case, then, as an alternative, the physician practice management entity often will acquire some or all of the net assets of the physician practice, assume some or all of the contractual rights and responsibilities of the physician practice, and execute a long-term management agreement to operate the physician practice with the owners of the physician practice (typically the physicians) receiving consideration in exchange. In addition to obtaining a long-term management agreement, the physician practice management entity often will secure the future services of individual physicians employed in the physician practice through employment and noncompete agreements. Source downloaded (UTC): 2026-09-10T01:28:47.938Z to 2026-09-10T01:28:47.938Z Record version: sha256:b4229d819f210858b32795c59dc756e94bbb3103860e84f4ab2a7baa845a9a78 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-10-10: 10 Objectives [Read section](https://asc.understandingaccounting.org/asc/810/10/#10-objectives) SEC content: no ##### [810-10-10-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-10-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:47.938Z to 2026-09-10T01:28:47.938Z Record version: sha256:f08c65d601607cacf843f6d48a862f3179cf25dd174f2e04999bf2f3a49e694b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The purpose of [consolidated financial statements](https://asc.understandingaccounting.org/glossary/c/#consolidated-financial-statements "The financial statements of a consolidated group of entities that include a parent and all its subsidiaries presented as those of a single economic entity.") is to present, primarily for the benefit of the [owners](https://asc.understandingaccounting.org/glossary/o/#owners "Used broadly to include holders of ownership interests (equity interests) of investor-owned entities, mutual entities, or not-for-profit entities. Owners include shareholders, partners, proprietors, or members or participants of mutual entities. Owners also include owner and member interests in the net assets of not-for-profit entities.") and creditors of the [parent](https://asc.understandingaccounting.org/glossary/p/#parent "An entity that has a controlling financial interest in one or more subsidiaries. (Also, an entity that is the primary beneficiary of a variable interest entity.)"), the results of operations and the financial position of a parent and all its [subsidiaries](https://asc.understandingaccounting.org/glossary/s/#subsidiary "An entity, including an unincorporated entity such as a partnership or trust, in which another entity, known as its parent, holds a controlling financial interest. (Also, a variable interest entity that is consolidated by a primary beneficiary.)") as if the [consolidated group](https://asc.understandingaccounting.org/glossary/c/#consolidated-group "A parent and all its subsidiaries.") were a single economic entity. There is a presumption that consolidated financial statements are more meaningful than separate financial statements and that they are usually necessary for a fair presentation when one of the entities in the consolidated group directly or indirectly has a controlling financial interest in the other entities. Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:326e7b2466a3d4cb91734b7a37202f6c0d60d1972fddbb635ad52d14dd986729 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-10-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/810/10/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [810-10-15-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:8b93c1c6c21b47b79773cfa961aa9145def9abf6223d081004c4bc4f69cb568b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Scope Section of the Overall Subtopic establishes the pervasive scope for all Subtopics of the Consolidation Topic. Unless explicitly addressed within specific Subtopics, the following scope guidance applies to all Subtopics of the Consolidation Topic. ##### [810-10-15-2](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:9f8aa7a2081e7e0c7b2d11b5e559d352ff3a551340d3cbf8ea358636f1b4b503 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The General Subsection of this Section establishes the pervasive scope for this Subtopic, with specific exceptions noted in the other Subsections of this Section. #### Entities ##### [810-10-15-3](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:337f1d2aa57af87bb28c683de060554ab5352bdb935ede83e5280ea1007678e3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All reporting entities shall apply the guidance in the Consolidation Topic to determine whether and how to consolidate another entity and apply the applicable Subsection as follows: 1. a If the reporting entity has an interest in an entity, it must determine whether that entity is within the scope of the Variable Interest Entities Subsections in accordance with paragraph [810-10-15-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14). If that entity is within the scope of the Variable Interest Entities Subsections, the reporting entity should first apply the guidance in those Subsections. Paragraph [810-10-15-17](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17) provides specific exceptions to applying the guidance in the Variable Interest Entities Subsections. 2. b If the reporting entity has an interest in an entity that is not within the scope of the Variable Interest Entities Subsections and is not within the scope of the Subsections mentioned in paragraph [810-10-15-3(c)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-3), the reporting entity should use only the guidance in the General Subsections to determine whether that interest constitutes a controlling financial interest. 3. c If the reporting entity has a contractual management relationship with another entity that is not within the scope of the Variable Interest Entities Subsections, the reporting entity should use the guidance in the Consolidation of Entities Controlled by Contract Subsections to determine whether the arrangement constitutes a controlling financial interest. ##### [810-10-15-4](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:dd378bd79b3e94a74ec9f3fd1158e31f1f92c37ba15df535259872dc4616ebb5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All [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.") are subject to this Topic's evaluation guidance for consolidation by a reporting entity, with specific qualifications and exceptions noted below. ##### [810-10-15-5](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:a4acdae2226ccc81742959a89b3e7fcf9e853fcfdac4dfed6f069f37c8b5cfff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The application of this Topic by [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) as defined in Topic 958 is subject to additional guidance in Subtopic 958-810. ##### [810-10-15-6](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:91437749e35d4ac9551cb0ac287e77fa7d9ddcd09997064cb8ce517c6634df58 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Topic applies to all reporting entities, with specific qualifications and exceptions noted below. ##### [810-10-15-7](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:326f87bb08082bae8b8c2b200c85ae939653fb64b110635b505b942a27673e55 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [810-10-15-8](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:cefedc223f3d466c6d97ca5d776ea6d5a5776cdb0d9a84de79d1010b203a9ff7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For legal entities other than limited partnerships, the usual condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly, of more than 50 percent of the outstanding voting shares of another entity is a condition pointing toward consolidation. The power to control may also exist with a lesser percentage of ownership, for example, by contract, lease, agreement with other stockholders, or by court decree. ##### [810-10-15-8A](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-8A) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:98a74de62b46e15c0b1043bb86a2bda10931a4f787bf5e2502174b41eacac7e8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Given the purpose and design of limited partnerships, [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.") through voting interests are analogous to voting rights held by shareholders of a corporation. For limited partnerships, the usual condition for a controlling financial interest, as a general rule, is ownership by one limited partner, directly or indirectly, of more than 50 percent of the limited partnership's kick-out rights through voting interests. The power to control also may exist with a lesser percentage of ownership, for example, by contract, lease, agreement with partners, or by court decree. ##### [810-10-15-9](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:1349697913046a15aeb4af86156df687ad67fbbf7221424822b81a47e45c23b3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A majority-owned [subsidiary](https://asc.understandingaccounting.org/glossary/s/#subsidiary "An entity, including an unincorporated entity such as a partnership or trust, in which another entity, known as its parent, holds a controlling financial interest. (Also, a variable interest entity that is consolidated by a primary beneficiary.)") is an entity separate from its parent and may be a [variable interest entity](https://asc.understandingaccounting.org/glossary/v/#variable-interest-entity "A legal entity subject to consolidation according to the provisions of the Variable Interest Entities Subsections of Subtopic 810-10.") (VIE) that is subject to consolidation in accordance with the Variable Interest Entities Subsections of this Subtopic. Therefore, a reporting entity with an explicit or implicit interest in a legal entity within the scope of the Variable Interest Entities Subsections shall follow the guidance in the Variable Interest Entities Subsections. ##### [810-10-15-10](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:149c0dbc6f337aa27d03ef5a55422f7ac3ba32c17a6f926bd43145c4988d1dd2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A reporting entity shall apply consolidation guidance for entities that are not in the scope of the Variable Interest Entities Subsections (see the [Variable Interest Entities Subsection](https://asc.understandingaccounting.org/asc/810/10/#15-scope-and-scope-exceptions) of this Section) as follows: 1. a All majority-owned subsidiaries—all entities in which a parent has a controlling financial interest—shall be consolidated. However, there are exceptions to this general rule. 1. 1 A majority-owned subsidiary shall not be consolidated if control does not rest with the majority [owner](https://asc.understandingaccounting.org/glossary/o/#owners "Used broadly to include holders of ownership interests (equity interests) of investor-owned entities, mutual entities, or not-for-profit entities. Owners include shareholders, partners, proprietors, or members or participants of mutual entities. Owners also include owner and member interests in the net assets of not-for-profit entities.")—for instance, if any of the following are present: 1. i The subsidiary is in legal reorganization 2. ii The subsidiary is in bankruptcy 3. iii The subsidiary operates under foreign exchange restrictions, controls, or other governmentally imposed uncertainties so severe that they cast significant doubt on the parent's ability to control the subsidiary. 4. iv In some instances, the powers of a shareholder with a majority voting interest or limited partner with a majority of kick-out rights through voting interests to control the operations or assets of the investee are restricted in certain respects by approval or veto rights granted to the noncontrolling shareholder or limited partner (hereafter referred to as noncontrolling rights). In paragraphs [810-10-25-2 through 25-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-2) , the term _noncontrolling shareholder_ refers to one or more noncontrolling shareholders and the terms _limited partner_ and _general partner_ refer to one or more limited or general partners. Those noncontrolling rights may have little or no impact on the ability of a shareholder with a majority voting interest or limited partner with a majority of kick-out rights through voting interests to control the investee's operations or assets, or, alternatively, those rights may be so restrictive as to call into question whether control rests with the majority owner. 5. v Control exists through means other than through ownership of a majority voting interest or a majority of kick-out rights through voting interests, for example as described in (c) through (e). 2. 2 A majority-owned subsidiary in which a parent has a controlling financial interest shall not be consolidated if the parent is a broker-dealer within the scope of Topic 940 and control is likely to be temporary. 3. 3 [Subparagraph superseded by Accounting Standards Update No. 2013-08](https://asc.understandingaccounting.org/updates/asu-2013-08/). 2. b [Subparagraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). 3. c Subtopic 810-30 shall be applied to determine the consolidation status of a research and development arrangement. 4. d The Consolidation of Entities Controlled by Contract Subsections of this Subtopic shall be applied to determine whether a contractual management relationship represents a controlling financial interest. 5. e Paragraph [710-10-45-1](https://asc.understandingaccounting.org/asc/710/10/#710-10-45-1) addresses the circumstances in which the accounts of a rabbi trust that is not a VIE (see the Variable Interest Entities Subsections for guidance on VIEs) shall be consolidated with the accounts of the employer in the financial statements of the employer. ##### [810-10-15-11](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:1ff1e2a7fc3aa9ceb66136a710c6b04eccd531ba5704382b14ea7e1b41527636 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A difference in fiscal periods of a parent and a subsidiary does not justify the exclusion of the subsidiary from consolidation. ##### [810-10-15-12](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:3062c89edf81033fcae6566dc8da981a352b5f442a5c24f31b8938c4f6e561b4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Topic does not apply in any of the following circumstances: 1. a An employer shall not consolidate an employee benefit plan subject to the provisions of Topic 712 or 715. 2. b [Subparagraph superseded by Accounting Standards Update No. 2009-16](https://asc.understandingaccounting.org/updates/asu-2009-16/). 3. c [Subparagraph superseded by Accounting Standards Update No. 2009-16](https://asc.understandingaccounting.org/updates/asu-2009-16/). 4. d Except as discussed in paragraph [946-810-45-3](https://asc.understandingaccounting.org/asc/810/946/#810-946-45-3), an investment company within the scope of Topic 946 shall not consolidate an investee that is not an investment company. 5. e A reporting entity shall not consolidate a governmental organization and shall not consolidate a financing entity established by a governmental organization unless the financing entity meets both of the following conditions: 1. 1 Is not a governmental organization 2. 2 Is used by the business entity in a manner similar to a VIE in an effort to circumvent the provisions of the Variable Interest Entities Subsections. 6. f A reporting entity shall not consolidate a legal entity that is required to comply with or operate in accordance with requirements that are similar to those included in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. 1. 1 A legal entity that is not required to comply with Rule 2a-7 of the Investment Company Act of 1940 qualifies for this exception if it is similar in its purpose and design, including the risks that the legal entity was designed to create and pass through to its investors, as compared with a legal entity required to comply with Rule 2a-7. 2. 2 A reporting entity subject to this scope exception shall disclose any explicit arrangements to provide financial support to legal entities that are required to comply with or operate in accordance with requirements that are similar to those included in Rule 2a-7, as well as any instances of such support provided for the periods presented in the performance statement. For purposes of applying this disclosure requirement, the types of support that should be considered include, but are not limited to, any of the following: 1. i Capital contributions (except pari passu investments) 2. ii Standby letters of credit 3. iii Guarantees of principal and interest on debt investments held by the legal entity 4. iv Agreements to purchase financial assets for amounts greater than fair value (for instance, at amortized cost or par value when the financial assets experience significant credit deterioration) 5. v Waivers of fees, including management fees. ### Variable Interest Entities #### Overall Guidance ##### [810-10-15-13](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:b953895f6bfc8d2f711742eaba4cf07f7bdcd7f91c4d0326d213b134f9340468 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Variable Interest Entities Subsections follow the same Scope and Scope Exceptions as outlined in the General Subsection of this Subtopic (see paragraph [810-10-15-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-1)), with specific transaction qualifications and exceptions noted below. ##### [810-10-15-13A](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-13A) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:88ae7a123b7fc4e120446775ce0e35babb7b552e7787989a6262f48e3d072202 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For purposes of applying the Variable Interest Entities Subsections, only substantive terms, transactions, and arrangements, whether contractual or noncontractual, shall be considered. Any term, transaction, or arrangement shall be disregarded when applying the provisions of the Variable Interest Entities Subsections if the term, transaction, or arrangement does not have a substantive effect on any of the following: 1. a A legal entity's status as a [variable interest entity](https://asc.understandingaccounting.org/glossary/v/#variable-interest-entity "A legal entity subject to consolidation according to the provisions of the Variable Interest Entities Subsections of Subtopic 810-10.") (VIE) 2. b A reporting entity's power over a VIE 3. c A reporting entity's obligation to absorb losses or its right to receive benefits of the [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."). ##### [810-10-15-13B](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-13B) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:ce92882b3277fdac29e32251406832f11b2bc5da845bb56670e1767efa1f97c6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Judgment, based on consideration of all the facts and circumstances, is needed to distinguish substantive terms, transactions, and arrangements from nonsubstantive terms, transactions, and arrangements. The purpose and design of legal entities shall be considered when performing this assessment. #### Entities ##### [810-10-15-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:d1f408e67d3851e97904a0861f2a0092861a4b788562ca5c7637d6729e10b418 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A legal entity shall be subject to consolidation under the guidance in the Variable Interest Entities Subsections if, by design, any of the following conditions exist. (The phrase _by design_ refers to legal entities that meet the conditions in this paragraph because of the way they are structured. For example, a legal entity under the control of its equity investors that originally was not a VIE does not become one because of operating losses. The design of the legal entity is important in the application of these provisions.) 1. a The total equity investment (equity investments in a legal entity are interests that are required to be reported as equity in that entity's financial statements) at risk is not sufficient to permit the legal entity to finance its activities without additional [subordinated financial support](https://asc.understandingaccounting.org/glossary/s/#subordinated-financial-support "Variable interests that will absorb some or all of a variable interest entity's (VIE's) expected losses.") provided by any parties, including equity holders. For this purpose, the total equity investment at risk has all of the following characteristics: 1. 1 Includes only equity investments in the legal entity that participate significantly in profits and losses even if those investments do not carry voting rights 2. 2 Does not include equity interests that the legal entity issued in exchange for subordinated interests in other VIEs 3. 3 Does not include amounts provided to the equity investor directly or indirectly by the legal entity or by other parties involved with the legal entity (for example, by fees, charitable contributions, or other payments), unless the provider is a [parent](https://asc.understandingaccounting.org/glossary/p/#parent "An entity that has a controlling financial interest in one or more subsidiaries. (Also, an entity that is the primary beneficiary of a variable interest entity.)"), [subsidiary](https://asc.understandingaccounting.org/glossary/s/#subsidiary "An entity, including an unincorporated entity such as a partnership or trust, in which another entity, known as its parent, holds a controlling financial interest. (Also, a variable interest entity that is consolidated by a primary beneficiary.)"), or affiliate of the investor that is required to be included in the same set of [consolidated financial statements](https://asc.understandingaccounting.org/glossary/c/#consolidated-financial-statements "The financial statements of a consolidated group of entities that include a parent and all its subsidiaries presented as those of a single economic entity.") as the investor 4. 4 Does not include amounts financed for the equity investor (for example, by loans or guarantees of loans) directly by the legal entity or by other parties involved with the legal entity, unless that party is a parent, subsidiary, or affiliate of the investor that is required to be included in the same set of consolidated financial statements as the investor. Paragraphs [810-10-25-45 through 25-47](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-45) discuss the amount of the total equity investment at risk that is necessary to permit a legal entity to finance its activities without additional subordinated financial support. 2. b As a group the holders of the equity investment at risk lack any one of the following three characteristics: 1. 1 The power, through voting rights or similar rights, to direct the activities of a legal entity that most significantly impact the entity's economic performance. 1. i For legal entities other than limited partnerships, investors lack that power through voting rights or similar rights if no [owners](https://asc.understandingaccounting.org/glossary/o/#owners "Used broadly to include holders of ownership interests (equity interests) of investor-owned entities, mutual entities, or not-for-profit entities. Owners include shareholders, partners, proprietors, or members or participants of mutual entities. Owners also include owner and member interests in the net assets of not-for-profit entities.") hold voting rights or similar rights (such as those of a common shareholder in a corporation). Legal entities that are not controlled by the holder of a majority voting interest because of noncontrolling shareholder veto rights (participating rights) as discussed in paragraphs [810-10-25-2 through 25-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-2) are not VIEs if the holders of the equity investment at risk as a group have the power to control the entity and the equity investment meets the other requirements of the Variable Interest Entities Subsections. 1. 01 If no owners hold voting rights or similar rights (such as those of a common shareholder in a corporation) over the activities of a legal entity that most significantly impact the entity's economic performance, [kick-out rights](https://asc.understandingaccounting.org/glossary/k/#kick-out-rights-vie-definition "The ability to remove the entity with the power to direct the activities of a VIE that most significantly impact the VIE's economic performance or to dissolve (liquidate) the VIE without cause.") or [participating rights](https://asc.understandingaccounting.org/glossary/p/#participating-rights-vie-definition "The ability to block or participate in the actions through which an entity exercises the power to direct the activities of a VIE that most significantly impact the VIE's economic performance. Participating rights do not require the holders of such rights to have the ability to initiate actions.") (according to their VIE definitions) held by the holders of the equity investment at risk shall not prevent interests other than the equity investment from having this characteristic unless a single equity holder (including its related parties and de facto agents) has the unilateral ability to exercise such rights. Alternatively, interests other than the equity investment at risk that provide the holders of those interests with kick-out rights or participating rights shall not prevent the equity holders from having this characteristic unless a single reporting entity (including its related parties and de facto agents) has the unilateral ability to exercise those rights. A [decision maker](https://asc.understandingaccounting.org/glossary/d/#decision-maker "An entity or entities with the power to direct the activities of another legal entity that most significantly impact the legal entity's economic performance according to the provisions of the Variable Interest Entities Subsections of Subtopic 810-10.") also shall not prevent the equity holders from having this characteristic unless the fees paid to the decision maker represent a variable interest based on paragraphs [810-10-55-37 through 55-38](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-37) . 2. ii For limited partnerships, partners lack that power if neither (01) nor (02) below exists. The guidance in this subparagraph does not apply to entities in industries (see paragraphs [910-810-45-1](https://asc.understandingaccounting.org/asc/810/910/#810-910-45-1) and [932-810-45-1](https://asc.understandingaccounting.org/asc/810/932/#810-932-45-1)) 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)). 1. 01 A simple majority or lower threshold of limited partners (including a single limited partner) with equity at risk is able to exercise 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.") (according to their voting interest entity definition) through voting interests over the general partner(s). 1. A For purposes of evaluating the threshold in (01) above, a general partner's kick-out rights held through voting interests shall not be included. Kick-out rights through voting interests held by entities under common control with the general partner or other parties acting on behalf of the general partner also shall not be included. 2. 02 Limited partners with equity at risk are able to exercise 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.") (according to their voting interest entity definition) over the general partner(s). 3. 03 For purposes of (01) and (02) above, evaluation of the substantiveness of participating rights and kick-out rights shall be based on the guidance included in paragraphs [810-10-25-2 through 25-14C](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-2). 2. 2 The obligation to absorb the [expected losses](https://asc.understandingaccounting.org/glossary/e/#expected-losses "A legal entity that has no history of net losses and expects to continue to be profitable in the foreseeable future can be a variable interest entity (VIE). A legal entity that expects to be profitable will have expected losses. A VIE's expected losses are the expected negative variability in the fair value of its net assets exclusive of variable interests and not the anticipated amount or variability of the net income or loss.") of the legal entity. The investor or investors do not have that obligation if they are directly or indirectly protected from the expected losses or are guaranteed a return by the legal entity itself or by other parties involved with the legal entity. See paragraphs [810-10-25-55 through 25-56](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-55) and Example 1 (see paragraph [810-10-55-42](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-42)) for a discussion of expected losses. 3. 3 The right to receive the [expected residual returns](https://asc.understandingaccounting.org/glossary/e/#expected-residual-returns "A variable interest entity's (VIE's) expected residual returns are the expected positive variability in the fair value of its net assets exclusive of variable interests.") of the legal entity. The investors do not have that right if their return is capped by the legal entity's governing documents or arrangements with other variable interest holders or the legal entity. For this purpose, the return to equity investors is not considered to be capped by the existence of outstanding stock options, convertible debt, or similar interests because if the options in those instruments are exercised, the holders will become additional equity investors. If interests other than the equity investment at risk provide the holders of that investment with these characteristics or if interests other than the equity investment at risk prevent the equity holders from having these characteristics, the entity is a VIE. 3. c The equity investors as a group also are considered to lack the characteristic in (b)(1) if both of the following conditions are present: 1. 1 The voting rights of some investors are not proportional to their obligations to absorb the expected losses of the legal entity, their rights to receive the expected residual returns of the legal entity, or both. 2. 2 Substantially all of the legal entity's activities (for example, providing financing or buying assets) either involve or are conducted on behalf of an investor that has disproportionately few voting rights. This provision is necessary to prevent a [primary beneficiary](https://asc.understandingaccounting.org/glossary/p/#primary-beneficiary "An entity that consolidates a variable interest entity (VIE). See paragraphs 810-10-25-38 through 25-38J for guidance on determining the primary beneficiary.") from avoiding consolidation of a VIE by organizing the legal entity with nonsubstantive voting interests. Activities that involve or are conducted on behalf of the related parties of an investor with disproportionately few voting rights shall be treated as if they involve or are conducted on behalf of that investor. The term _related parties_ in this paragraph refers to all parties identified in paragraph [810-10-25-43](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-43), except for de facto agents under paragraph [810-10-25-43(d)](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-43). For purposes of applying this requirement, reporting entities shall consider each party's obligations to absorb expected losses and rights to receive expected residual returns related to all of that party's interests in the legal entity and not only to its equity investment at risk. ##### [810-10-15-15](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:b1ceb63d07c8debde267acc3561bd61c19fa8fb4d931bec95dee4011099fedec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Portions of legal entities or aggregations of assets within a [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 not be treated as separate entities for purposes of applying the Variable Interest Entities Subsections unless the entire entity is a VIE. Some examples are divisions, departments, branches, and pools of assets subject to liabilities that give the creditor no recourse to other assets of the entity. Majority-owned subsidiaries are legal entities separate from their parents that are subject to the Variable Interest Entities Subsections and may be VIEs. ##### [810-10-15-16](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:9db1b84e3efe81c07b04495eb98d71076f73f78a2ba67ab24fc8d202147be918 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-10](https://asc.understandingaccounting.org/updates/asu-2014-10/). ##### [810-10-15-17](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:ac58b984994513e29136a25b85e7291749848ee6d4a2e5ff00c724a4f8f0dd65 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following exceptions to the Variable Interest Entities Subsections apply to all legal entities in addition to the exceptions listed in paragraph [810-10-15-12](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-12): 1. a [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) are not subject to the Variable Interest Entities Subsections, except that they may be related parties for purposes of applying paragraphs [810-10-25-42 through 25-44](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-42) . In addition, if an NFP is used by business reporting entities in a manner similar to a VIE in an effort to circumvent the provisions of the Variable Interest Entities Subsections, that NFP shall be subject to the guidance in the Variable Interest Entities Subsections. 2. b Separate accounts of life insurance entities as described in Topic 944 are not subject to consolidation according to the requirements of the Variable Interest Entities Subsections. 3. c A reporting entity with an interest in a VIE or potential VIE created before December 31, 2003, is not required to apply the guidance in the Variable Interest Entities Subsections to that VIE or legal entity if the reporting entity, after making an exhaustive effort, is unable to obtain the information necessary to do any one of the following: 1. 1 Determine whether the legal entity is a VIE 2. 2 Determine whether the reporting entity is the VIE's primary beneficiary 3. 3 Perform the accounting required to consolidate the VIE for which it is determined to be the primary beneficiary. This inability to obtain the necessary information is expected to be infrequent, especially if the reporting entity participated significantly in the design or redesign of the legal entity. The scope exception in this provision applies only as long as the reporting entity continues to be unable to obtain the necessary information. Paragraph [810-10-50-6](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-6) requires certain disclosures to be made about interests in VIEs subject to this provision. Paragraphs [810-10-30-7 through 30-9](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-7) provide transition guidance for a reporting entity that subsequently obtains the information necessary to apply the Variable Interest Entities Subsections to a VIE subject to this exception. 4. d A legal entity that is deemed to be a [business](https://asc.understandingaccounting.org/glossary/b/#business "Paragraphs 805-10-55-3A805-10-55-4805-10-55-5805-10-55-6 and 805-10-55-8805-10-55-9 define what is considered a business.") need not be evaluated by a reporting entity to determine if the legal entity is a VIE under the requirements of the Variable Interest Entities Subsections unless any of the following conditions exist (however, for legal entities that are excluded by this provision, other generally accepted accounting principles \[GAAP\] should be applied): 1. 1 The reporting entity, its related parties (all parties identified in paragraph [810-10-25-43](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-43), except for de facto agents under paragraph [810-10-25-43(d)](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-43)), or both participated significantly in the design or redesign of the legal entity. However, this condition does not apply if the legal entity is an operating joint venture under joint control of the reporting entity and one or more independent parties or a franchisee. 2. 2 The legal entity is designed so that substantially all of its activities either involve or are conducted on behalf of the reporting entity and its related parties. 3. 3 The reporting entity and its related parties provide more than half of the total of the equity, subordinated debt, and other forms of subordinated financial support to the legal entity based on an analysis of the fair values of the interests in the legal entity. 4. 4 The activities of the legal entity are primarily related to securitizations or other forms of asset-backed financings or single-lessee leasing arrangements. A legal entity that previously was not evaluated to determine if it was a VIE because of this provision need not be evaluated in future periods as long as the legal entity continues to meet the conditions in (d). ##### [810-10-15-17A](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17A) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:9f778d90185ed04e3b4f9187300e4eaa9eb76b8f51a5eb7d0d5a5c9c255f09e3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2016-03](https://asc.understandingaccounting.org/updates/asu-2016-03/). ##### [810-10-15-17AA](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17AA) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:ef04f589364f125bc1a9ccd858a2b3fc106d794726227ba83ed2221d0636db7b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-17](https://asc.understandingaccounting.org/updates/asu-2018-17/). ##### [810-10-15-17AB](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17AB) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:529a32cb9dae975347c3d27d4431277440e299a0afcb0cedcf00a500a05e3b39 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-17](https://asc.understandingaccounting.org/updates/asu-2018-17/). #### Accounting Alternative for Entities under Common Control ##### [810-10-15-17AC](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17AC) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:5382a18496f0e0ad3a627d00ed6d6abe32b063379ff2db8b17819b3d3e01c518 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [810-10-15-17AD through 15-17AF](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17AD) , [810-10-50-2AG through 50-2AI](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-2AG) , and [810-10-55-205AU through 55-205BF](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AU) provide guidance for a [private company](https://asc.understandingaccounting.org/glossary/p/#private-company "An entity other than a public business entity, a not-for-profit entity, or an employee benefit plan within the scope of Topics 960 through 965 on plan accounting.") electing the accounting alternative for entities under common control in this Subtopic. ##### [810-10-15-17AD](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17AD) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:27cdea56fee3f670a225bdde135521c60a0676cbe82a54025c6f65cac0fc07cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [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.") need not be evaluated by a private company (reporting entity) under the guidance in the Variable Interest Entities Subsections if all of the following criteria are met: 1. a The reporting entity and the legal entity are under common control. 2. b The reporting entity and the legal entity are not under common control of a [public business entity](https://asc.understandingaccounting.org/glossary/p/#public-business-entity "A public business entity is a business entity meeting any one of the criteria below. Neither a not-for-profit entity nor an employee benefit plan is a business entity. It is required by the U.S. Securities and Exchange Commission (SEC) to file or furnish financial statements, or does file or furnish financial statements (including voluntary filers), with the SEC (including other entities whose financial statements or financial information are required to be or are included in a filing). It is required by the Securities Exchange Act of 1934 (the Act), as amended, or rules or regulations promulgated under the Act, to file or furnish financial statements with a regulatory agency other than the SEC. It is required to file or furnish financial statements with a foreign or domestic regulatory agency in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer. It has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market. It has one or more securities that are not subject to contractual restrictions on transfer, and it is required by law, contract, or regulation to prepare U.S. GAAP financial statements (including notes) and make them publicly available on a periodic basis (for example, interim or annual periods). An entity must meet both of these conditions to meet this criterion. An entity may meet the definition of a public business entity solely because its financial statements or financial information is included in another entity's filing with the SEC. In that case, the entity is only a public business entity for purposes of financial statements that are filed or furnished with the SEC."). 3. c The legal entity under common control is not a public business entity. 4. d The reporting entity does not directly or indirectly have a controlling financial interest in the legal entity when considering the General Subsections of this Topic. The Variable Interest Entities Subsections shall not be applied when making this determination. Applying this accounting alternative is an accounting policy election. If a private company elects to apply this accounting alternative, it shall apply this alternative to all legal entities if criteria (a) through (d) are met. A reporting entity that elects the accounting alternative and, thus, does not apply the guidance in the Variable Interest Entities Subsections shall continue to apply other accounting guidance (including guidance in the General Subsections of this Subtopic) unless another scope exception from this Topic applies. A reporting entity applying this alternative shall disclose the required information specified in paragraphs [810-10-50-2AG through 50-2AI](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-2AG) unless the legal entity is consolidated by the reporting entity through accounting guidance other than VIE guidance. ##### [810-10-15-17AE](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17AE) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:9e04389b6e858a20dc8afde12c3806d5637907f2225b67842618ca7dc721625d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To determine whether the private company (reporting entity) and the legal entity are under common control of a parent solely for the purpose of applying paragraph [810-10-15-17AD(a)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17AD), the private company shall consider only the parent's direct and indirect voting interest in the private company and the legal entity. In other words, only the guidance in the General Subsections of this Topic shall be considered for determining whether a parent has a direct or indirect controlling financial interest in the private company and the legal entity as required in paragraph [810-10-15-17AD(a)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17AD). The guidance in the Variable Interest Entities Subsections of this Topic shall not be applied for making this determination. See paragraphs [810-10-55-205AU through 55-205AZ](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AU) for illustrative guidance. ##### [810-10-15-17AF](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17AF) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:2ad9a530fd72d7d3b37ac8928c276a595d8c2488e0f119ab54296bd9a3094247 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If any of the criteria in paragraph [810-10-15-17AD](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17AD) for applying the accounting alternative cease to be met, a private company shall apply the guidance in the Variable Interest Entities Subsections at the date of change on a prospective basis, except for situations in which a reporting entity becomes a public business entity. When a reporting entity becomes a public business entity, it shall apply the guidance in the Variable Interest Entities Subsections in accordance with Topic 250 on accounting changes and error corrections. ##### [810-10-15-17B](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17B) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:4cb87d38e3e95e3c353f0e99df5407c2e56a7228dcb04840811ed8e3f7f6156d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-17](https://asc.understandingaccounting.org/updates/asu-2018-17/). ##### [810-10-15-17C](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17C) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:506893dbe7570f678383645a124261cdfb92b6b220549b21ccbb7311dd4dcb18 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-17](https://asc.understandingaccounting.org/updates/asu-2018-17/). #### Collateralized Financing Entities ##### [810-10-15-17D](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17D) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:34b9ef01dd40ef69b691f5f1ab56ddc8f3d18140ef10a06e52453a4cb089b0a7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance on [collateralized financing entities](https://asc.understandingaccounting.org/glossary/c/#collateralized-financing-entity "A variable interest entity that holds financial assets, issues beneficial interests in those financial assets, and has no more than nominal equity. The beneficial interests have contractual recourse only to the related assets of the collateralized financing entity and are classified as financial liabilities. A collateralized financing entity may hold nonfinancial assets temporarily as a result of default by the debtor on the underlying debt instruments held as assets by the collateralized financing entity or in an effort to restructure the debt instruments held as assets by the collateralized financing entity. A collateralized financing entity also may hold other financial assets and financial liabilities that are incidental to the operations of the collateralized financing entity and have carrying values that approximate fair value (for example, cash, broker receivables, or broker payables).") in this Topic provides a measurement alternative to Topic 820 on fair value measurement and applies to a reporting entity that consolidates a collateralized financing entity when both of the following conditions exist: 1. a All of the financial assets and the financial liabilities of the collateralized financing entity are measured at fair value in the consolidated financial statements under other applicable Topics, other than financial assets and financial liabilities that are incidental to the operations of the collateralized financing entity and have carrying values that approximate fair value (for example, cash, broker receivables, or broker payables). 2. b The changes in the fair values of those financial assets and financial liabilities are reflected in earnings. ### Consolidation of Entities Controlled by Contract #### Overall Guidance ##### [810-10-15-18](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:02bf7c2a50b87c19ba9e516065020996ba6f37f0beda95593b0e918bd4af9a86 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Consolidation of Entities Controlled by Contract Subsections follow the same Scope and Scope Exceptions as outlined in the General Subsection of this Subtopic, see paragraph [810-10-15-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-1), with specific qualifications and exceptions noted below. #### Entities ##### [810-10-15-19](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:465c38227e011d1baf0d39b8e4ea10abc7001304214a234929d5fa72d5d61c7b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Consolidation of Entities Controlled by Contract Subsections applies to all entities that are not determined to be [variable interest entities](https://asc.understandingaccounting.org/glossary/v/#variable-interest-entity "A legal entity subject to consolidation according to the provisions of the Variable Interest Entities Subsections of Subtopic 810-10.") (VIEs) (see the [Variable Interest Entities Subsection](https://asc.understandingaccounting.org/asc/810/10/#15-scope-and-scope-exceptions) of this Section) if the circumstances are similar to those described in the Consolidation of Entities Controlled by Contract Subsections. For example, there may be industries other than the health care industry in which a contractual management arrangement is established under circumstances similar to those addressed in the Consolidation of Entities Controlled by Contract Subsections. #### Transactions ##### [810-10-15-20](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-20) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:a0ee71383b7456bc91e6f3fb15f1f106ec5e4b291f952d26f3f5ab35b2eade1d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Consolidation of Entities Controlled by Contract Subsections applies, in part, to contractual management arrangements with both of the following characteristics: 1. a Relationships between entities that operate in the health care industry including the practices of medicine, dentistry, veterinary science, and chiropractic medicine (for convenience, entities engaging in these practices are collectively referred to as physician practices) 2. b Relationships in which the physician practice management entity does not own the majority of the outstanding voting equity instruments of the physician practice, whether because the physician practice management entity is precluded by law from owning those equity instruments or because the physician practice management entity has elected not to own those equity instruments. As stated in the preceding paragraph, there may be industries other than the health care industry in which a contractual management arrangement is established under circumstances similar to those addressed in the Consolidation of Entities Controlled by Contract Subsections. ##### [810-10-15-21](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-21) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:1e85b8cfacf92875749666680e456060ec7cd9bf7c615957b3e306e90aba5f1a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A physician practice management entity can establish a controlling financial interest in a physician practice through contractual management arrangements. Specifically, a controlling financial interest exists if, for a requisite period of time, the physician practice management entity has control over the physician practice and has a financial interest in the physician practice that meets all six of the requirements listed in the following paragraph. That paragraph contains guidance that describes how those six requirements are to be applied. Paragraph [810-10-55-206](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-206) contains a decision tree illustrating the basic analysis called for by both the six requirements and the presumptive, but not the other, interpretive guidance. ##### [810-10-15-22](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-22) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:50.396Z to 2026-09-10T01:28:50.396Z Record version: sha256:d3d053ab6970597cd05c26372ea1735dfb5d4ba928ac269fd7a10d17096337e6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If all of the following requirements are met, then the physician practice management entity has a controlling financial interest in the physician practice: 1. a Term. The contractual arrangement between the physician practice management entity and the physician practice has both of the following characteristics: 1. 1 Has a term that is either the entire remaining legal life of the physician practice entity or a period of 10 years or more 2. 2 Is not terminable by the physician practice except in the case of gross negligence, fraud, or other illegal acts by the physician practice management entity, or bankruptcy of the physician practice management entity. 2. b Control. The physician practice management entity has exclusive authority over all decision making related to both of the following: 1. 1 Ongoing, major, or central operations of the physician practice, except for the dispensing of medical services. This must include exclusive [decision-making authority](https://asc.understandingaccounting.org/glossary/d/#decision-making-authority "The power to direct the activities of a legal entity that most significantly impact the entity's economic performance according to the provisions of the Variable Interest Entities Subsections of Subtopic 810-10.") over scope of services, patient acceptance policies and procedures, pricing of services, negotiation and execution of contracts, and establishment and approval of operating and capital budgets. This authority also must include exclusive decision-making authority over issuance of debt if debt financing is an ongoing, major, or central source of financing for the physician practice. 2. 2 Total practice compensation of the licensed medical professionals as well as the ability to establish and implement guidelines for the selection, hiring, and firing of them. 3. c Financial interest. The physician practice management entity must have a significant financial interest in the physician practice that meets both of the following criteria: 1. 1 Is unilaterally saleable or transferable by the physician practice management entity 2. 2 Provides the physician practice management entity with the right to receive income, both as ongoing fees and as proceeds from the sale of its interest in the physician practice, in an amount that fluctuates based on the performance of the operations of the physician practice and the change in the fair value thereof. Term, control, financial interest, and so forth are further described in paragraphs [810-10-25-63 through 25-79](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-63) . Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:7d0bb74d4eb7117eab18f0a343dc8b0a0d50ec80a025bb1fe4a04d52090ce6a8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-10-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/810/10/#25-recognition) SEC content: no ##### [810-10-25-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:6bbeedbd700e7ad78d99aa08c7ef313ad09a26091b558e18607dd55db3a37407 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For [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.") other than limited partnerships, consolidation is appropriate if a reporting entity has a controlling financial interest in another entity and a specific scope exception does not apply (see Section 810-10-15). The usual condition for a controlling financial interest is ownership of a majority voting interest, but in some circumstances control does not rest with the majority owner. ##### [810-10-25-1A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-1A) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:beabbeefaeaef52b92ae1f1a796cc6c2f09221813e00c6b9fb311ace1307ea8f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Given the purpose and design of limited partnerships, [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.") through voting interests are analogous to voting rights held by shareholders of a corporation. Consolidation is appropriate if a reporting entity has a controlling financial interest in a limited partnership and a specific scope exception does not apply (see Section 810-10-15). The usual condition for a controlling financial interest in a limited partnership is ownership of a majority of the limited partnership's kick-out rights through voting interests, but, in some circumstances, control does not rest with the majority owner. #### The Effect of Noncontrolling Rights on Consolidation ##### [810-10-25-2](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:57bf78131acf01c15c8809210c0c890be07aa522c43d544b4832888cb2e2cc91 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [810-10-15-10(a)(1)(iv)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-10) explains that, in some instances, the powers of a shareholder with a majority voting interest or limited partner with a majority of kick-out rights through voting interests to control the operations or assets of the investee are restricted in certain respects by approval or veto rights granted to the noncontrolling shareholder or limited partner (referred to as noncontrolling rights). That paragraph also explains that, in paragraphs [810-10-25-2 through 25-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-2) , the term _noncontrolling shareholder_ refers to one or more noncontrolling shareholders and the terms _limited partner_ and _general partner_ refer to one or more limited or general partners. Paragraph [810-10-15-10(a)(1)(iv)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-10) explains that those noncontrolling rights may have little or no impact on the ability of a shareholder with a majority voting interest or limited partner with a majority of kick-out rights through voting interests to control the investee's operations or assets, or, alternatively, those rights may be so restrictive as to call into question whether control rests with the majority owner. ##### [810-10-25-3](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:6a8f402bf1c562127a09022c5b7eb6a81d2bd71b92ffb39f2e0167b7b931490e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in paragraphs [810-10-25-1 through 25-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-1) shall be applied in assessing the impact on consolidation of noncontrolling shareholder or limited partner approval or veto rights in both of the following circumstances: 1. a Investments in which the investor has a majority voting interest in investees that are corporations or analogous entities (such as limited liability companies that have governing provisions that are the functional equivalent of regular corporations), or investments in which a limited partner has a majority of kick-out rights through voting interests in a limited partnership 2. b Other circumstances in which legal entities would be consolidated in accordance with generally accepted accounting principles (GAAP), absent the existence of certain approval or veto rights held by noncontrolling shareholders or limited partners. ##### [810-10-25-4](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:b2b978318209255c5dc930423557715c3a240926fa93ede6f490173cdebc10a0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in paragraphs [810-10-25-2 through 25-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-2) on noncontrolling rights does not apply in either of the following situations: 1. a Entities that, in accordance with GAAP, carry substantially all of their assets, including investments in controlled entities, at fair value with changes in value reported in a statement of net income or financial performance 2. b Investments in [variable interest entities](https://asc.understandingaccounting.org/glossary/v/#variable-interest-entity "A legal entity subject to consolidation according to the provisions of the Variable Interest Entities Subsections of Subtopic 810-10.") (VIEs) (see the [Variable Interest Entities Subsection](https://asc.understandingaccounting.org/asc/810/10/#15-scope-and-scope-exceptions) of Section 810-10-15). ##### [810-10-25-5](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:883e3ec156f9057d42a4325d6cb70b1eb1c15db57bd66caf16030163da500813 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The assessment of whether the rights of a noncontrolling shareholder or limited partner should overcome the presumption of consolidation by the investor with a majority voting interest or limited partner with a majority of kick-out rights through voting interests in its investee is a matter of judgment that depends on facts and circumstances. The framework in which such facts and circumstances are judged shall be based on whether the noncontrolling rights, individually or in the aggregate, allow the noncontrolling shareholder or limited partner to effectively participate in certain significant financial and operating decisions of the investee that are 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."). Effective participation means the ability to block significant decisions proposed by the investor who has a majority voting interest or the general partner. That is, control does not rest with the majority owner because the investor with the majority voting interest cannot cause the investee to take an action that is significant in the ordinary course of business if it has been vetoed by the noncontrolling shareholder. Similarly, for limited partnerships, control does not rest with the limited partner with the majority of kick-out rights through voting interests if the limited partner cannot cause the general partner to take an action that is significant in the ordinary course of business if it has been vetoed by other limited partners. This assessment of noncontrolling rights shall be made at the time a majority voting interest or a majority of kick-out rights through voting interests is obtained and shall be reassessed if there is a significant change to the terms or in the exercisability of the rights of the noncontrolling shareholder or limited partner. ##### [810-10-25-6](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:1bc69ad81dc95fb45869037ee37b7905f42c17c8bb4b0a077cf8c0f217e9d307 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All noncontrolling rights could be described as protective of the noncontrolling shareholder's or limited partner's investment in the investee, but some noncontrolling rights also allow the noncontrolling shareholder or limited partner to participate in determining certain significant financial and operating decisions of the investee that are made in the ordinary course of business (referred to as [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.")). Participation means the ability to block actions proposed by the investor that has a majority voting interest or the general partner. Thus, the investor with the majority voting interest or the general partner must have the agreement of the noncontrolling shareholder or limited partner to take certain actions. Participation does not mean the ability of the noncontrolling shareholder or limited partner to initiate actions. ##### [810-10-25-7](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:12e4e731356ecd06dd06c6dc75681f16df8a76746de2d767950bb558ebc5a16a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Noncontrolling rights that are only protective in nature (referred to as [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.")) would not overcome the presumption that the owner of a majority voting interest or the limited partner with a majority of kick-out rights through voting interests shall consolidate its investee. Substantive noncontrolling rights that allow the noncontrolling shareholder or limited partner to effectively participate in certain significant financial and operating decisions of the investee that are made in the investee's ordinary course of business, although also protective of the noncontrolling shareholder's or limited partner's investment, shall overcome the presumption that the investor with a majority voting interest or limited partner with a majority of kick-out rights through voting interests shall consolidate its investee. ##### [810-10-25-8](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:715c1cc901a6bee9cb3a2d5180cf475e03b312e2869252b9488c5310b22bcfc8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For purposes of this Subsection, decisions made in the ordinary course of business are defined as decisions about matters of a type consistent with those normally expected to be addressed in directing and carrying out the entity's 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 definition would not include self-dealing transactions with controlling shareholders or limited partners. ##### [810-10-25-9](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:64814a5a85d7a85ddbdc91e30fff7b450a6534d4d0b671bb64d7665f0c179d2a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following guidance addresses considerations of noncontrolling shareholder or limited partner rights, specifically: 1. a Protective rights 2. b Participating rights 3. c Factors to consider in evaluating whether noncontrolling rights are substantive participating rights. ##### [810-10-25-10](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:fbd8ac160cdb636adf5af2123699905e5f69f304d626346d0328f6e0875f4acf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Noncontrolling rights (whether granted by contract or by law) that would allow the noncontrolling shareholder or limited partner to block corporate or partnership actions would be considered protective rights and would not overcome the presumption of consolidation by the investor with a majority voting interest or limited partner with a majority of kick-out rights through voting interests in its investee. The following list is illustrative of the protective rights that often are provided to the noncontrolling shareholder or limited partner but is not all-inclusive: 1. a Amendments to articles of incorporation or partnership agreements of the investee 2. b Pricing on transactions between the owner of a majority voting interest or limited partner with a majority of kick-out rights through voting interests and the investee and related self-dealing transactions 3. c Liquidation of the investee in the context of Topic 852 on reorganizations or a decision to cause the investee 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 (noncontrolling rights relating to acquisitions and dispositions of assets that are expected to be made in the ordinary course of business are participating rights; determining whether such rights are substantive requires judgment in light of the relevant facts and circumstances \[see paragraphs [810-10-25-13](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-13) and [810-10-55-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-1)\]) 5. e Issuance or repurchase of equity interests. ##### [810-10-25-11](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:2560544fe6b561fc520d6c27d60ce8ba04dacd61eb1ce75b223582f3c3f87401 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Noncontrolling rights (whether granted by contract or by law) that would allow the noncontrolling shareholder or limited partner to effectively participate in either of the following corporate or partnership actions shall be considered substantive participating rights and would overcome the presumption that the investor with a majority voting interest or limited partner with a majority of kick-out rights through voting interests shall consolidate its investee. The following list is illustrative of substantive participating rights, but is not necessarily all-inclusive: 1. a Selecting, terminating, and setting the compensation of management responsible for implementing the investee's policies and procedures 2. b Establishing operating and capital decisions of the investee, including budgets, in the ordinary course of business. ##### [810-10-25-12](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:5da2ba6eca6ae2e70e171a578462ca2d692970cefcc43ef3923d7648ca7722cf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The rights noted in paragraph [810-10-25-11](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-11) are participating rights because, in the aggregate, the rights allow the noncontrolling shareholder or limited partner to effectively participate in certain significant financial and operating decisions that occur as part of the ordinary course of the investee's business and are significant factors in directing and carrying out the activities of the business. Individual rights, such as the right to veto the termination of management responsible for implementing the investee's policies and procedures, should be assessed based on the facts and circumstances to determine if they are substantive participating rights in and of themselves. However, noncontrolling rights that appear to be participating rights but that by themselves are not substantive (see paragraphs [810-10-25-13](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-13) and [810-10-55-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-1)) would not overcome the presumption of consolidation by the investor with a majority voting interest or limited partner with a majority of kick-out rights through voting interests in its investee. The likelihood that the veto right will be exercised by the noncontrolling shareholder or limited partner should not be considered when assessing whether a noncontrolling right is a substantive participating right. ##### [810-10-25-13](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:13d9c6eb2db67e3f07a3ee05e872ed230ab7537eb107bcd89816bb6a005c0354 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following factors shall be considered in evaluating whether noncontrolling rights that appear to be participating are substantive rights, that is, whether these factors provide for effective participation in certain significant financial and operating decisions that are made in the investee's ordinary course of business: 1. a Consideration shall be given to situations in which a majority shareholder or limited partner with a majority of kick-out rights through voting interests owns such a significant portion of the investee that the noncontrolling shareholder or limited partner has a small economic interest. As the disparity between the ownership interest of majority and noncontrolling shareholders or between the limited partner with a majority of kick-out rights through voting interests and noncontrolling limited partners increases, the rights of the noncontrolling shareholder or limited partner are presumptively more likely to be protective rights and shall raise the level of skepticism about the substance of the right. Similarly, although a majority owner is presumed to control an investee, the level of skepticism about such ability shall increase as the investor's or limited partner's economic interest in the investee decreases. 2. b The governing documents shall be considered to determine at what level decisions are made—at the shareholder or limited partner level or at the board level—and the rights at each level also shall be considered. In all situations, any matters that can be put to a vote of the shareholders or limited partners shall be considered to determine if other investors, individually or in the aggregate, have substantive participating rights by virtue of their ability to vote on matters submitted to a shareholder or limited partner vote. 3. c Relationships between the majority and noncontrolling shareholders or partners (other than an investment in the common investee) that are of a related-party nature, as defined in Topic 850, shall be considered in determining whether the participating rights of the noncontrolling shareholder or limited partner are substantive. For example, if the noncontrolling shareholder or limited partner in an investee is a member of the immediate family of the majority shareholder, general partner, or limited partner with a majority of kick-out rights through voting interests of the investee, then the rights of the noncontrolling shareholder or limited partner likely would not overcome the presumption of consolidation by the investor with a majority voting interest or limited partner with a majority of kick-out rights through voting interests in its investee. 4. d Certain noncontrolling rights may deal with operating or capital decisions that are not significant to the ordinary course of business of the investee. Noncontrolling rights related to decisions that are not considered significant for directing and carrying out the activities of the investee's business are not substantive participating rights and would not overcome the presumption of consolidation by the investor with a majority voting interest or limited partner with a majority of kick-out rights through voting interests in its investee. Examples of such noncontrolling rights include all of the following: 1. 1 Location of the investee's headquarters 2. 2 Name of the investee 3. 3 Selection of auditors 4. 4 Selection of accounting principles for purposes of separate reporting of the investee's operations. 5. e Certain noncontrolling rights may provide for the noncontrolling shareholder or limited partner to participate in certain significant financial and operating decisions that are made in the investee's ordinary course of business; however, the existence of such noncontrolling rights shall not overcome the presumption that the majority owner shall consolidate, if it is remote that the event or transaction that requires noncontrolling shareholder or limited partner approval will occur. Remote is defined in Topic 450 as the chance of the future event or events occurring being slight. 6. f An owner of a majority voting interest or limited partner with a majority of kick-out rights through voting interests who has a contractual right to buy out the interest of the noncontrolling shareholder or limited partner in the investee for fair value or less shall consider the feasibility of exercising that contractual right when determining if the participating rights of the noncontrolling shareholder or limited partner are substantive. If such a buyout is prudent, feasible, and substantially within the control of the majority owner, the contractual right to buy out the noncontrolling owner or limited partner demonstrates that the participating right of the noncontrolling shareholder or limited partner is not a substantive right. The existence of such call options, for purposes of the General Subsections, negates the participating rights of the noncontrolling shareholder or limited partner to veto an action of the majority shareholder or general partner, rather than create an additional ownership interest for that majority shareholder. It would not be prudent, feasible, and substantially within the control of the majority owner to buy out the noncontrolling shareholder or limited partner if, for example, either of the following conditions exists: 1. 1 The noncontrolling shareholder or limited partner controls technology that is critical to the investee. 2. 2 The noncontrolling shareholder or limited partner is the principal source of funding for the investee. Paragraph [810-10-55-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-1) provides additional guidance on assessing substantive participating rights. ##### [810-10-25-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:9525573191de044c540de47ad77bd9cdd42c166945552d5811168ba55ab2de6d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity that is not controlled by the holder of a majority voting interest or holder of a majority of kick-out rights through voting interests because of noncontrolling shareholder or limited partner veto rights described in paragraphs [810-10-25-2 through 25-13](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-2) and [810-10-55-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-1) is not a VIE if the shareholders or partners as a group (the holders of the equity investment at risk) have the power to control the entity and the equity investment meets the other requirements of paragraphs [810-10-15-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14) and [810-10-25-45 through 25-47](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-45) , as applicable. #### Kick-Out Rights ##### [810-10-25-14A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-14A) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:76171bd2421018132caf9209fc91f31c9600df18751029720c0dca1f0e256f61 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For limited partnerships, the determination of whether [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.") are substantive shall be based on a consideration of all relevant facts and circumstances. For kick-out rights to be considered substantive, 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. a 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. b 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. c The absence of an adequate number of qualified replacement general partners or the lack of adequate compensation to attract a qualified replacement 4. d The absence of an explicit, reasonable mechanism in the limited partnership's governing documents 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. e The inability of the limited partners holding the rights to obtain the information necessary to exercise them. ##### [810-10-25-14B](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-14B) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:72642ab49e740ee72506f0f81d41be8e48f04ae20e2366eaf4cc1ad0b1eb15a7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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 would 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 shall not be required to be contractual for a withdrawal right to be considered as a potential kick-out right. ##### [810-10-25-14C](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-14C) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:6964c7a90ca3d379a8fd059895d389fd81f595575769084c02a4fa5b149e6e71 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 pursuant to paragraph [810-10-25-14A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-14A). 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. Paragraphs [810-10-55-4N through 55-4W](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4N) provide additional guidance on assessing kick-out rights. #### Retention of Specialized Accounting for Investments in Consolidation ##### [810-10-25-15](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:24080eda5f90a2744f89dbd64daa93bbfdff6224b7215f0357adbbb13ffc929b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For the purposes of consolidating a subsidiary subject to guidance in an industry-specific Topic, an entity shall retain the industry-specific guidance applied by that subsidiary. #### Profits Resulting from Intercompany Transfers of LIFO Inventories ##### [810-10-25-16](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:674d164bc038ab90314d42f27d4988c31af8d3cb119d8642bdd75f94c382eb46 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraphs [810-10-55-2 through 55-4](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-2) for guidance on accounting for profits resulting from intercompany transfers of last-in, first-out (LIFO) inventories. ##### [810-10-25-17](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:c98c3ba9c652fe8fba800ed1fc79b382499f5021aed47bc21ede4e036ac42349 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [810-10-25-18](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:48547d1bb549a2a8658c17bc1518350a3a53b5cb4bdfe7d8a45895b9bee6ddd6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [810-10-25-19](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:5c92a05787ff655e0a47704996f73f78f8cddf52511bab9841b94497e9baef58 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ### Variable Interest Entities ##### [810-10-25-20](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-20) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:24709d5dabc746a0315d09445c4748162bd638aab13ad2ddb3b7bd8914af5dd0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subsection addresses various transactional considerations in determining whether a [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.") is a [variable interest entity](https://asc.understandingaccounting.org/glossary/v/#variable-interest-entity "A legal entity subject to consolidation according to the provisions of the Variable Interest Entities Subsections of Subtopic 810-10.") (VIE) and would need to be consolidated by the reporting entity, specifically: 1. a Determining the variability to be considered 1. 1 Terms of interests issued 2. 2 Subordination 3. 3 Certain interest rate risk 4. 4 Certain derivative instruments 2. b Initial involvement with a legal entity 3. c Consolidation based on [variable interests](https://asc.understandingaccounting.org/glossary/v/#variable-interests "The investments or other interests that will absorb portions of a variable interest entity's (VIE's) expected losses or receive portions of the entity's expected residual returns are called variable interests. Variable interests in a VIE are contractual, ownership, or other pecuniary interests in a VIE that change with changes in the fair value of the VIE's net assets exclusive of variable interests. Equity interests with or without voting rights are considered variable interests if the legal entity is a VIE and to the extent that the investment is at risk as described in paragraph 810-10-15-14. Paragraph 810-10-25-55 explains how to determine whether a variable interest in specified assets of a legal entity is a variable interest in the entity. Paragraphs 810-10-55-16810-10-55-17810-10-55-18810-10-55-19810-10-55-20810-10-55-21810-10-55-22810-10-55-23810-10-55-24810-10-55-25810-10-55-26810-10-55-27810-10-55-28810-10-55-29810-10-55-30810-10-55-31810-10-55-32810-10-55-33810-10-55-34810-10-55-35810-10-55-36810-10-55-37810-10-55-38810-10-55-39810-10-55-40810-10-55-41 describe various types of variable interests and explain in general how they may affect the determination of the primary beneficiary of a VIE.") 1. 1 The effect of related parties 2. 2 Sufficiency of equity at risk 3. 3 Implicit variable interests 4. 4 Variable interest and interests in specific assets of a VIE. #### Determining the Variability to Be Considered ##### [810-10-25-21](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-21) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:ce684981ff4f7ea9ae3dd54be1d969d361d60bfe45c86457fa6911043b964020 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The variability that is considered in applying the Variable Interest Entities Subsections affects the determination of all of the following: 1. a Whether the legal entity is a VIE 2. b Which interests are variable interests in the legal entity 3. c Which party, if any, is the [primary beneficiary](https://asc.understandingaccounting.org/glossary/p/#primary-beneficiary "An entity that consolidates a variable interest entity (VIE). See paragraphs 810-10-25-38 through 25-38J for guidance on determining the primary beneficiary.") of the VIE. That variability will affect any calculation of [expected losses and expected residual returns](https://asc.understandingaccounting.org/glossary/e/#expected-losses-and-expected-residual-returns "Expected losses and expected residual returns refer to amounts derived from expected cash flows as described in FASB Concepts Statement No. 7, Using Cash Flow Information and Present Value in Accounting Measurements. However, expected losses and expected residual returns refer to amounts discounted and otherwise adjusted for market factors and assumptions rather than to undiscounted cash flow estimates. The definitions of expected losses and expected residual returns specify which amounts are to be considered in determining expected losses and expected residual returns of a variable interest entity (VIE). (P) December 16, 2024; (N) December 16, 2025 105-10-65-9 Expected losses and expected residual returns refer to amounts derived from expected cash flows. However, expected losses and expected residual returns refer to amounts discounted and otherwise adjusted for market factors and assumptions rather than to undiscounted cash flow estimates. The definitions of expected losses and expected residual returns specify which amounts are to be considered in determining expected losses and expected residual returns of a variable interest entity (VIE). A computation of expected losses, expected residual returns, and expected variability is illustrated in paragraphs 810-10-55-42810-10-55-43810-10-55-44810-10-55-45810-10-55-46810-10-55-47810-10-55-48810-10-55-49."), if such a calculation is necessary. Paragraph [810-10-25-38A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A) provides guidance on the use of a quantitative approach associated with expected losses and expected residual returns in connection with determining which party is the primary beneficiary. ##### [810-10-25-22](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-22) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:23c4dc20a6fa6dcc81a073d8c930389f5ac7d9cfa25f426565f109f1b8f71af1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The variability to be considered in applying the Variable Interest Entities Subsections shall be based on an analysis of the design of the legal entity as outlined in the following steps: 1. a Step 1: Analyze the nature of the risks in the legal entity (see paragraphs [810-10-25-24 through 25-25](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-24) ). 2. b Step 2: Determine the purpose(s) for which the legal entity was created and determine the variability (created by the risks identified in Step 1) the legal entity is designed to create and pass along to its interest holders (see paragraphs [810-10-25-26 through 25-36](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-26) ). ##### [810-10-25-23](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-23) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:46eeb9dac11f458bf5f1d79c55251805b2cbc93aa60e0f0644bebae0548a625f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For purposes of paragraphs [810-10-25-21 through 25-36](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-21) , interest holders include all potential variable interest holders (including contractual, ownership, or other pecuniary interests in the legal entity). After determining the variability to consider, the reporting entity can determine which interests are designed to absorb that variability. The cash flow and fair value are methods that can be used to measure the amount of variability (that is, expected losses and expected residual returns) of a legal entity. However, a method that is used to measure the amount of variability does not provide an appropriate basis for determining which variability should be considered in applying the Variable Interest Entities Subsections. ##### [810-10-25-24](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-24) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:de995fc836254ceeca8eb068ade7419c3723a2ec6661d2f6c3e4780f5f54d418 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The risks to be considered in Step 1 that cause variability include, but are not limited to, the following: 1. a Credit risk 2. b Interest rate risk (including prepayment risk) 3. c Foreign currency exchange risk 4. d Commodity price risk 5. e Equity price risk 6. f Operations risk. ##### [810-10-25-25](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-25) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:3c85a7dfe5527f397a94e5aaab54bbfe61e7e54b5e4db5783ed02f57cd37ace8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In determining the purpose for which the legal entity was created and the variability the legal entity was designed to create and pass along to its interest holders in Step 2, all relevant facts and circumstances shall be considered, including, but not limited to, the following factors: 1. a The activities of the legal entity 2. b The terms of the contracts the legal entity has entered into 3. c The nature of the legal entity's interests issued 4. d How the legal entity's interests were negotiated with or marketed to potential investors 5. e Which parties participated significantly in the design or redesign of the legal entity. ##### [810-10-25-26](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-26) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:8aab64b26137f7b84bb7f7bce22224a184c45fa6626c146d80851e1636ca6d33 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Typically, assets and operations of the legal entity create the legal entity's variability (and thus, are not variable interests), and liabilities and equity interests absorb that variability (and thus, are variable interests). Other contracts or arrangements may appear to both create and absorb variability because at times they may represent assets of the legal entity and at other times liabilities (either recorded or unrecorded). The role of a contract or arrangement in the design of the legal entity, regardless of its legal form or accounting classification, shall dictate whether that interest should be treated as creating variability for the entity or absorbing variability. ##### [810-10-25-27](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-27) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:4ebd4dc38aed06dee813df3d7cf5d765f9338d1bedf6635e7a71377399938bd1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A review of the terms of the contracts that the legal entity has entered into shall include an analysis of the original formation documents, governing documents, marketing materials, and other contractual arrangements entered into by the legal entity and provided to potential investors or other parties associated with the legal entity. ##### [810-10-25-28](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-28) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:d9007310781ab8752a1bc229356bea9b25caa6bd63a5654d3c80b1040b5c7c91 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Example 3 (see paragraph [810-10-55-55](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-55)) is intended to demonstrate how to apply the provisions of this guidance on determining the variability to be considered, including whether arrangements (such as derivative instruments or guarantees of value) create variability (and are therefore not variable interests) or absorb variability (and are therefore variable interests). ##### [810-10-25-29](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-29) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:883beec641e86e98f36176697b8fc992b1acde2155aa181306ef07081b9a823e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A qualitative analysis of the design of the legal entity, as performed in accordance with the guidance in the Variable Interest Entities Subsections, will often be conclusive in determining the variability to consider in applying the guidance in the Variable Interest Entities Subsections, determining which interests are variable interests, and ultimately determining which variable interest holder, if any, is the primary beneficiary. ##### [810-10-25-30](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-30) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:18edb0d0e30b39affa04611055904f91b4423b4ef0ed8aaa18b92a534161d56d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following addresses various considerations related to determination of variability, specifically: 1. a Terms of interests issued 2. b Subordination 3. c Certain interest rate risk 4. d Certain derivative instruments. ##### [810-10-25-31](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-31) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:d45fd11bf96657702a9c567965a8006b173d07b40e6c79974b978683efd88d33 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An analysis of the nature of the legal entity's interests issued shall include consideration as to whether the terms of those interests, regardless of their legal form or accounting designation, transfer all or a portion of the risk or return (or both) of certain assets or operations of the legal entity to holders of those interests. The variability that is transferred to those interest holders strongly indicates a variability that the legal entity is designed to create and pass along to its interest holders. ##### [810-10-25-32](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-32) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:3607ce8411be07342f588453115f9f6aa31b956ac317e9f4bd33dbda855e1497 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For legal entities that issue both senior interests and subordinated interests, the determination of which variability shall be considered often will be affected by whether the subordination (that is, the priority on claims to the legal entity's cash flows) is substantive. The subordinated interest(s) (as discussed in paragraph [810-10-55-23](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-23)) generally will absorb [expected losses](https://asc.understandingaccounting.org/glossary/e/#expected-losses "A legal entity that has no history of net losses and expects to continue to be profitable in the foreseeable future can be a variable interest entity (VIE). A legal entity that expects to be profitable will have expected losses. A VIE's expected losses are the expected negative variability in the fair value of its net assets exclusive of variable interests and not the anticipated amount or variability of the net income or loss.") prior to the senior interest(s). As a consequence, the senior interest generally has a higher credit rating and lower interest rate compared with the subordinated interest. The amount of a subordinated interest in relation to the overall expected losses and residual returns of the legal entity often is the primary factor in determining whether such subordination is substantive. The variability that is absorbed by an interest that is substantively subordinated strongly indicates a particular variability that the legal entity was designed to create and pass along to its interest holders. If the subordinated interest is considered equity-at-risk, as that term is used in paragraph [810-10-15-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14), that equity can be considered substantive for the purpose of determining the variability to be considered, even if it is not deemed sufficient under paragraphs [810-10-15-14(a)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14) and [810-10-25-45](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-45). ##### [810-10-25-33](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-33) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:27c252d99ab3f82484a304ce6e9b073ca3fc87bc953bbfdeaf940534f129d60e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Periodic interest receipts or payments shall be excluded from the variability to consider if the legal entity was not designed to create and pass along the interest rate risk associated with such interest receipts or payments to its interest holders. However, interest rate fluctuations also can result in variations in cash proceeds received upon anticipated sales of fixed-rate investments in an actively managed portfolio or those held in a static pool that, by design, will be required to be sold prior to maturity to satisfy obligations of the legal entity. That variability is strongly indicated as a variability that the legal entity was designed to create and pass along to its interest holders. ##### [810-10-25-34](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-34) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:09bcbbb38faf857a1538324384522b6b1b75d77f77604210ab2bfa813aa58d68 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A legal entity may enter into an arrangement, such as a derivative instrument, to either reduce or eliminate the variability created by certain assets or operations of the legal entity or mismatches between the overall asset and liability profiles of the legal entity, thereby protecting certain liability and equity holders from exposure to such variability. During the life of the legal entity those arrangements can be in either an asset position or a liability position (recorded or unrecorded) from the perspective of the legal entity. ##### [810-10-25-35](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-35) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:453b323ee4faa2aa91087cc41f59ca23dd2d7a5f0c1b0b35abf2ac6236ca756c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following characteristics, if both are present, are strong indications that a derivative instrument is a creator of variability: 1. a Its [underlying](https://asc.understandingaccounting.org/glossary/u/#underlying "A specified interest rate, security price, commodity price, foreign exchange rate, index of prices or rates, or other variable (including the occurrence or nonoccurrence of a specified event such as a scheduled payment under a contract). An underlying may be a price or rate of an asset or liability but is not the asset or liability itself. An underlying is a variable that, along with either a notional amount or a payment provision, determines the settlement of a derivative instrument.") is an observable market rate, price, index of prices or rates, or other market observable variable (including the occurrence or nonoccurrence of a specified market observable event). 2. b The derivative counterparty is senior in priority relative to other interest holders in the legal entity. ##### [810-10-25-36](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-36) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:abf718f7d39103ccbd07030d400518aefd37a025110b23007caa0889e795caea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the changes in the fair value or cash flows of the derivative instrument are expected to offset all, or essentially all, of the risk or return (or both) related to a majority of the assets (excluding the derivative instrument) or operations of the legal entity, the design of the legal entity will need to be analyzed further to determine whether that instrument should be considered a creator of variability or a variable interest. For example, if a written call or put option or a total return swap that has the characteristics in (a) and (b) in the preceding paragraph relates to the majority of the assets owned by a legal entity, the design of the legal entity will need to be analyzed further (see paragraphs [810-10-25-21 through 25-29](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-21) ) to determine whether that instrument should be considered a creator of variability or a variable interest. #### Initial Involvement with a Legal Entity ##### [810-10-25-37](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-37) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:ccd21bab5456e57e00aa1afcf78e77debf44e5fec172b2595a2cd7d988e747c6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The initial determination of whether a legal entity is a VIE shall be made on the date at which a reporting entity becomes involved with the legal entity. For purposes of the Variable Interest Entities Subsections, involvement with a legal entity refers to ownership, contractual, or other pecuniary interests that may be determined to be variable interests. That determination shall be based on the circumstances on that date including future changes that are required in existing governing documents and existing contractual arrangements. #### Consolidation Based on Variable Interests ##### [810-10-25-38](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:ae5242dafef65ffa5931a39a11c71a2575b70eac928f5f11973783025bba4a88 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A reporting entity shall consolidate a VIE when that reporting entity has a variable interest (or combination of variable interests) that provides the reporting entity with a controlling financial interest on the basis of the provisions in paragraphs [810-10-25-38A through 25-38J](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A) . The reporting entity that consolidates a VIE is called the primary beneficiary of that VIE. ##### [810-10-25-38A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:10ba5ccd801a86400856b0138d55c3c34e53b1054f9812a0e2c57c03de77e7c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A reporting entity with a variable interest in a VIE shall assess whether the reporting entity has a controlling financial interest in the VIE and, thus, is the VIE's primary beneficiary. This shall include an assessment of the characteristics of the reporting entity's variable interest(s) and other involvements (including involvement of related parties and de facto agents), if any, in the VIE, as well as the involvement of other variable interest holders. Paragraph [810-10-25-43](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-43) provides guidance on related parties and de facto agents. Additionally, the assessment shall consider the VIE's purpose and design, including the risks that the VIE was designed to create and pass through to its variable interest holders. A reporting entity shall be deemed to have a controlling financial interest in a VIE if it has both of the following characteristics: 1. a The power to direct the activities of a VIE that most significantly impact the VIE's economic performance 2. b The obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The quantitative approach described in the definitions of the terms [expected losses](https://asc.understandingaccounting.org/glossary/e/#expected-losses "A legal entity that has no history of net losses and expects to continue to be profitable in the foreseeable future can be a variable interest entity (VIE). A legal entity that expects to be profitable will have expected losses. A VIE's expected losses are the expected negative variability in the fair value of its net assets exclusive of variable interests and not the anticipated amount or variability of the net income or loss."), [expected residual returns](https://asc.understandingaccounting.org/glossary/e/#expected-residual-returns "A variable interest entity's (VIE's) expected residual returns are the expected positive variability in the fair value of its net assets exclusive of variable interests."), and [expected variability](https://asc.understandingaccounting.org/glossary/e/#expected-variability "Expected variability is the sum of the absolute values of the expected residual return and the expected loss. Expected variability in the fair value of net assets includes expected variability resulting from the operating results of the legal entity.") is not required and shall not be the sole determinant as to whether a reporting entity has these obligations or rights. Only one reporting entity, if any, is expected to be identified as the primary beneficiary of a VIE. Although more than one reporting entity could have the characteristic in (b) of this paragraph, only one reporting entity if any, will have the power to direct the activities of a VIE that most significantly impact the VIE's economic performance. ##### [810-10-25-38B](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38B) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:e37a8f5a08037e21b150262145bc7bcd55a33d7953d7d04f9305a4466bb23726 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A reporting entity must identify which activities most significantly impact the VIE's economic performance and determine whether it has the power to direct those activities. A reporting entity's ability to direct the activities of an entity when circumstances arise or events happen constitutes power if that ability relates to the activities that most significantly impact the economic performance of the VIE. A reporting entity does not have to exercise its power in order to have power to direct the activities of a VIE. ##### [810-10-25-38C](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38C) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:3c14b86be31e54e591e661be79edf8763d4ebd6abdc0c7596865fc02f7dc817b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A reporting entity's determination of whether it has the power to direct the activities of a VIE that most significantly impact the VIE's economic performance shall not be affected by the existence of [kick-out rights](https://asc.understandingaccounting.org/glossary/k/#kick-out-rights-vie-definition "The ability to remove the entity with the power to direct the activities of a VIE that most significantly impact the VIE's economic performance or to dissolve (liquidate) the VIE without cause.") or [participating rights](https://asc.understandingaccounting.org/glossary/p/#participating-rights-vie-definition "The ability to block or participate in the actions through which an entity exercises the power to direct the activities of a VIE that most significantly impact the VIE's economic performance. Participating rights do not require the holders of such rights to have the ability to initiate actions.") unless a single reporting entity (including its related parties and de facto agents) has the unilateral ability to exercise those kick-out rights or participating rights. A single reporting entity (including its related parties and de facto agents) that has the unilateral ability to exercise kick-out rights or participating rights may be the party with the power to direct the activities of a variable interest entity that most significantly impact the entity's economic performance.These requirements related to kick-out rights and participating rights are limited to this particular analysis and are not applicable to transactions accounted for under other authoritative guidance.[Protective rights](https://asc.understandingaccounting.org/glossary/p/#protective-rights-vie-definition "Rights designed to protect the interests of the party holding those rights without giving that party a controlling financial interest in the entity to which they relate. For example, they include any of the following: Approval or veto rights granted to other parties that do not affect the activities that most significantly impact the entity's economic performance. Protective rights often apply to fundamental changes in the activities of an entity or apply only in exceptional circumstances. Examples include both of the following: A lender might have rights that protect the lender from the risk that the entity will change its activities to the detriment of the lender, such as selling important assets or undertaking activities that change the credit risk of the entity. Other interests might have the right to approve a capital expenditure greater than a particular amount or the right to approve the issuance of equity or debt instruments. The ability to remove the reporting entity that has a controlling financial interest in the entity in circumstances such as bankruptcy or on breach of contract by that reporting entity. Limitations on the operating activities of an entity. For example, a franchise agreement for which the entity is the franchisee might restrict certain activities of the entity but may not give the franchisor a controlling financial interest in the franchisee. Such rights may only protect the brand of the franchisor.") held by other parties do not preclude a reporting entity from having the power to direct the activities of a variable interest entity that most significantly impact the entity's economic performance. ##### [810-10-25-38D](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38D) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:1261c3c4362177b06338bd3d3804cb30131d1aab5dfeb24f4fef82629dba4185 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a reporting entity determines that power is, in fact, shared among multiple unrelated parties such that no one party has the power to direct the activities of a VIE that most significantly impact the VIE's economic performance, then no party is the primary beneficiary. Power is shared if two or more unrelated parties together have the power to direct the activities of a VIE that most significantly impact the VIE's economic performance and if decisions about those activities require the consent of each of the parties sharing power. If a reporting entity concludes that power is not shared but the activities that most significantly impact the VIE's economic performance are directed by multiple unrelated parties and the nature of the activities that each party is directing is the same, then the party, if any, with the power over the majority of those activities shall be considered to have the characteristic in paragraph [810-10-25-38A(a)](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A). ##### [810-10-25-38E](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38E) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:5c2232eb2768db15f426d1a29af409ed8f52be8e6f1dcda0c8a019c033d8a6d2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the activities that impact the VIE's economic performance are directed by multiple unrelated parties, and the nature of the activities that each party is directing is not the same, then a reporting entity shall identify which party has the power to direct the activities that most significantly impact the VIE's economic performance. One party will have this power, and that party shall be deemed to have the characteristic in paragraph [810-10-25-38A(a)](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A). ##### [810-10-25-38F](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38F) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:8f746a992132155054d8b11cea5da87bff1fea49d48e30e97bfce251af98ffb1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Although a reporting entity may be significantly involved with the design of a VIE, that involvement does not, in isolation, establish that reporting entity as the entity with the power to direct the activities that most significantly impact the economic performance of the VIE. However, that involvement may indicate that the reporting entity had the opportunity and the incentive to establish arrangements that result in the reporting entity being the variable interest holder with that power. For example, if a sponsor has an explicit or implicit financial responsibility to ensure that the VIE operates as designed, the sponsor may have established arrangements that result in the sponsor being the entity with the power to direct the activities that most significantly impact the economic performance of the VIE. ##### [810-10-25-38G](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38G) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:599bc94034624bdfcb4f52baedb2642e45a251825a9925276ac45b3b0592c96f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Consideration shall be given to situations in which a reporting entity's economic interest in a VIE, including its obligation to absorb losses or its right to receive benefits, is disproportionately greater than its stated power to direct the activities of a VIE that most significantly impact the VIE's economic performance. Although this factor is not intended to be determinative in identifying a primary beneficiary, the level of a reporting entity's economic interest may be indicative of the amount of power that reporting entity holds. ##### [810-10-25-38H](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38H) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:2d807a43017b0d8b657b33695df1a45363fd3577c5ebd770a1d30908013d8ff3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For purposes of evaluating the characteristic in paragraph [810-10-25-38A(b)](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A), fees paid to a reporting entity (other than those included in arrangements that expose a reporting entity to risk of loss as described in paragraph [810-10-25-38J](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38J)) that meet both of the following conditions shall be excluded: 1. a The fees are compensation for services provided and are commensurate with the level of effort required to provide those services. 2. b The service arrangement includes only terms, conditions, or amounts that are customarily present in arrangements for similar services negotiated at arm's length. ##### [810-10-25-38I](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38I) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:d3f93753efff06800249d7b1306dd850a68dbf6f9d1a9512b554fe666be503cf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Facts and circumstances shall be considered when assessing the conditions in paragraph [810-10-25-38H](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38H). An arrangement that is designed in a manner such that the fee is inconsistent with the reporting entity's role or the type of service would not meet those conditions. To assess whether a fee meets those conditions, a reporting entity may need to analyze similar arrangements among parties outside the relationship being evaluated. However, a fee would not presumptively fail those conditions if similar service arrangements did not exist in the following circumstances: 1. a The fee arrangement relates to a unique or new service. 2. b The fee arrangement reflects a change in what is considered customary for the services. In addition, the magnitude of a fee, in isolation, would not cause an arrangement to fail those conditions. ##### [810-10-25-38J](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38J) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:5ddab2c5273a87c3a3e8616ada10940f8d1e8cec7667c8a020558010902e5d98 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Fees or payments in connection with agreements that expose a reporting entity (the [decision maker](https://asc.understandingaccounting.org/glossary/d/#decision-maker "An entity or entities with the power to direct the activities of another legal entity that most significantly impact the legal entity's economic performance according to the provisions of the Variable Interest Entities Subsections of Subtopic 810-10.") or service provider) to risk of loss in the VIE shall not be eligible for the evaluation in paragraph [810-10-25-38H](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38H). Those fees include, but are not limited to, the following: 1. a Those related to guarantees of the value of the assets or liabilities of a VIE 2. b Obligations to fund operating losses 3. c Payments associated with written put options on the assets of the VIE 4. d Similar obligations such as some liquidity commitments or agreements (explicit or implicit) that protect holders of other interests from suffering losses in the VIE. Therefore, those fees shall be considered for evaluating the characteristic in paragraph [810-10-25-38A(b)](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A). Examples of those variable interests are discussed in paragraphs [810-10-55-25](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-25) and [810-10-55-29](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-29). ##### [810-10-25-39](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-39) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:5215413bf478f9f2e66ab6afedbc06be27a9c594a6c51c0226a308faa4d70a3b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). ##### [810-10-25-40](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-40) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:2865db9c036d3260421d8354408e71fe73e3245396d90b074ad1668def6dad8c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). ##### [810-10-25-41](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-41) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:c342adb8562ba05d15f8bad637ca2ec1003d466e0c7b6d4fd6d341a90c39059a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). ##### [810-10-25-42](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-42) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:d29f29ae2fa3c0f38ed2afde367e6f309229c4679389351ff51d66a3b3969531 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Single Decision Maker—The assessment in this paragraph shall be applied only by a single reporting entity that meets the characteristic in paragraph [810-10-25-38A(a)](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A). For purposes of determining whether that single reporting entity, which is a single decision maker, is the primary beneficiary of a VIE, the single decision maker shall include all of its direct variable interests in the entity and, on a proportionate basis, its indirect variable interests in the entity held through related parties (the term _related parties_ in this paragraph refers to all parties as defined in paragraph [810-10-25-43](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-43)). For example, if the single decision maker owns a 20 percent interest in a related party and that related party owns a 40 percent interest in the entity being evaluated, the single decision maker's indirect interest in the VIE held through the related party would be equivalent to an 8 percent direct interest in the VIE for purposes of evaluating the characteristic in paragraph [810-10-25-38A(b)](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A) (assuming it has no other relationships with the entity). Similarly, if an employee (or de facto agent) of the single decision maker owns an interest in the entity being evaluated and that employee's (or de facto agent's) interest has been financed by the single decision maker, the single decision maker would include that financing as its indirect interest in the evaluation. For example, if a single decision maker's employees have a 30 percent interest in the VIE and one third of that interest was financed by the single decision maker, then the single decision maker's indirect interest in the VIE through the financing would be equivalent to a 10 percent direct interest in the VIE. ##### [810-10-25-43](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-43) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:7ba96f5fb2377b0aabd8b773e739752c0ae904bdc9c189937de7f246783cacae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For purposes of applying the guidance in the Variable Interest Entities Subsections, unless otherwise specified, the term _related parties_ includes those parties identified in Topic 850 and certain other parties that are acting as de facto agents or de facto principals of the variable interest holder. All of the following are considered to be de facto agents of a reporting entity: 1. a A party that cannot finance its operations without [subordinated financial support](https://asc.understandingaccounting.org/glossary/s/#subordinated-financial-support "Variable interests that will absorb some or all of a variable interest entity's (VIE's) expected losses.") from the reporting entity, for example, another VIE of which the reporting entity is the primary beneficiary 2. b A party that received its interests as a contribution or a loan from the reporting entity 3. c An officer, employee, or member of the governing board of the reporting entity 4. d A party that has an agreement that it cannot sell, transfer, or encumber its interests in the VIE without the prior approval of the reporting entity. The right of prior approval creates a de facto agency relationship only if that right could constrain the other party's ability to manage the economic risks or realize the economic rewards from its interests in a VIE through the sale, transfer, or encumbrance of those interests. However, a de facto agency relationship does not exist if both the reporting entity and the party have right of prior approval and the rights are based on mutually agreed terms by willing, independent parties. 1. 1 [Subparagraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). 2. 2 [Subparagraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). 5. e A party that has a close business relationship like the relationship between a professional service provider and one of its significant clients. ##### [810-10-25-44](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-44) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:c25e474c76d0595d0d779b71e5fdb932bbc6e9f8bc46e338604b6797aeaee5e7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this paragraph shall be applicable for situations in which the conditions in paragraph [810-10-25-44A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-44A) have been met or when power is shared for a VIE. In situations in which a reporting entity concludes that neither it nor one of its related parties has the characteristics in paragraph [810-10-25-38A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A) but, as a group, the reporting entity and its related parties (including the de facto agents described in paragraph [810-10-25-43](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-43)) have those characteristics, then the party within the related party group that is most closely associated with the VIE is the primary beneficiary. The determination of which party within the related party group is most closely associated with the VIE requires judgment and shall be based on an analysis of all relevant facts and circumstances, including all of the following: 1. a The existence of a principal-agency relationship between parties within the related party group 2. b The relationship and significance of the activities of the VIE to the various parties within the related party group 3. c A party's exposure to the variability associated with the anticipated economic performance of the VIE 4. d The design of the VIE. ##### [810-10-25-44A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-44A) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:c560fd1e3a009b73690c1a63e0f945104a5a310ed34e6ae363fb49cc6442db7e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In situations in which a single decision maker concludes, after performing the assessment in paragraph [810-10-25-42](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-42), that it does not have the characteristics in paragraph [810-10-25-38A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A), the single decision maker shall apply the guidance in paragraph [810-10-25-44](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-44) only when the single decision maker and one or more of its related parties are under common control and, as a group, the single decision maker and those related parties have the characteristics in paragraph [810-10-25-38A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A). ##### [810-10-25-44B](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-44B) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:97c382fc6809891f663205a03b7aacf62dfef106a52a66716542f27ea97a22a0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This paragraph applies to a related party group that has the characteristics in paragraph [810-10-25-38A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A) only when both criteria (a) and (b) below are met. This paragraph is not applicable for legal entities that meet the conditions in paragraph [323-740-25-1](https://asc.understandingaccounting.org/asc/323/740/#323-740-25-1). 1. a The conditions in paragraph [810-10-25-44A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-44A) are not met by a single decision maker and its related parties. 2. b Substantially all of the activities of the VIE either involve or are conducted on behalf of a single variable interest holder (excluding the single decision maker) in the single decision maker's related party group. The single variable interest holder for which substantially all of the activities either involve or are conducted on its behalf would be the primary beneficiary. The evaluation in (b) above should be based on a qualitative assessment of all relevant facts and circumstances. In some cases, when performing that qualitative assessment, quantitative information may be considered. This assessment is consistent with the assessments in paragraphs [810-10-15-14(c)(2)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14) and [810-10-15-17(d)(2)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17). ##### [810-10-25-45](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-45) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:cd0cb3f05156489a652258b40ec0d51928213d95597b92e73ed1a65a70fec467 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An equity investment at risk of less than 10 percent of the legal entity's total assets shall not be considered sufficient to permit the legal entity to finance its activities without subordinated financial support in addition to the equity investment unless the equity investment can be demonstrated to be sufficient. The demonstration that equity is sufficient may be based on either qualitative analysis or quantitative analysis or a combination of both. Qualitative assessments, including, but not limited to, the qualitative assessments described in (a) and (b), will in some cases be conclusive in determining that the legal entity's equity at risk is sufficient. If, after diligent effort, a reasonable conclusion about the sufficiency of the legal entity's equity at risk cannot be reached based solely on qualitative considerations, the quantitative analyses implied by (c) shall be made. In instances in which neither a qualitative assessment nor a quantitative assessment, taken alone, is conclusive, the determination of whether the equity at risk is sufficient shall be based on a combination of qualitative and quantitative analyses. 1. a The legal entity has demonstrated that it can finance its activities without additional subordinated financial support. 2. b The legal entity has at least as much equity invested as other entities that hold only similar assets of similar quality in similar amounts and operate with no additional subordinated financial support. 3. c The amount of equity invested in the legal entity exceeds the estimate of the legal entity's expected losses based on reasonable quantitative evidence. ##### [810-10-25-46](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-46) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:d9627665ecc04feb0c3aa823f1299f5f7c6f790e45b39b5b5b89cca9d4c13b5f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some legal entities may require an equity investment at risk greater than 10 percent of their assets to finance their activities, especially if they engage in high-risk activities, hold high-risk assets, or have exposure to risks that are not reflected in the reported amounts of the legal entities' assets or liabilities. The presumption in the preceding paragraph does not relieve a reporting entity of its responsibility to determine whether a particular legal entity with which the reporting entity is involved needs an equity investment at risk greater than 10 percent of its assets in order to finance its activities without subordinated financial support in addition to the equity investment. ##### [810-10-25-47](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-47) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:d6116372591164bbb229287609a872b744860eb2ac83917e8b24d36d701aa61d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The design of the legal entity (for example, its capital structure) and the apparent intentions of the parties that created the legal entity are important qualitative considerations, as are ratings of its outstanding debt (if any), the interest rates, and other terms of its financing arrangements. Often, no single factor will be conclusive and the determination will be based on the preponderance of evidence. For example, if a legal entity does not have a limited life and tightly constrained activities, if there are no unusual arrangements that appear designed to provide subordinated financial support, if its equity interests do not appear designed to require other subordinated financial support, and if the entity has been able to obtain commercial financing arrangements on customary terms, the equity would be expected to be sufficient. In contrast, if a legal entity has a very small equity investment relative to other entities with similar activities and has outstanding subordinated debt that obviously is effectively a replacement for an additional equity investment, the equity would not be expected to be sufficient. ##### [810-10-25-48](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-48) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:d833e4e18be510d089937a9df57b5c055bb2c64d9a84d1c71799077fae8e851d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-07](https://asc.understandingaccounting.org/updates/asu-2014-07/). ##### [810-10-25-49](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-49) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:fc60d4e7b78a8f4325bb1a9e26324e29b3131fa514a473db9a9696e2dc5bb4ff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following guidance addresses whether a reporting entity should consider whether it holds an implicit variable interest in a VIE or potential VIE if specific conditions exist. ##### [810-10-25-50](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-50) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:4851e2daa9b8adeaf39edb86f6fd60033983793f7aecc9d603878f3772179e88 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The identification of variable interests (implicit and explicit) may affect the following: 1. a The determination as to whether the potential VIE shall be considered a VIE 2. b The calculation of expected losses and residual returns 3. c The determination as to which party, if any, is the primary beneficiary of the VIE. Thus, identifying whether a reporting entity holds a variable interest in a VIE or potential VIE is necessary to apply the provisions of the guidance in the Variable Interest Entities Subsections. ##### [810-10-25-51](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-51) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:5208619c5ee1cc9058033087d693833b96744a100743c99117b08a7dfb1f6eea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An implicit variable interest is an implied pecuniary interest in a VIE that changes with changes in the fair value of the VIE's net assets exclusive of variable interests. Implicit variable interests may arise from transactions with related parties, as well as from transactions with unrelated parties. ##### [810-10-25-52](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-52) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:b0c7fa269d358506f21493f692a9bc13b8789df8076563c2c029ac2c83b8caf8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The identification of explicit variable interests involves determining which contractual, ownership, or other pecuniary interests in a legal entity directly absorb or receive the variability of the legal entity. An implicit variable interest acts the same as an explicit variable interest except it involves the absorbing and (or) receiving of variability indirectly from the legal entity, rather than directly from the legal entity. Therefore, the identification of an implicit variable interest involves determining whether a reporting entity may be indirectly absorbing or receiving the variability of the legal entity. The determination of whether an implicit variable interest exists is a matter of judgment that depends on the relevant facts and circumstances. For example, an implicit variable interest may exist if the reporting entity can be required to protect a variable interest holder in a legal entity from absorbing losses incurred by the legal entity. ##### [810-10-25-53](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-53) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:9de63d0133169c1131fc3d9fa7157c05930707a203ab970d890ef74e2e690020 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The significance of a reporting entity's involvement or interest shall not be considered in determining whether the reporting entity holds an implicit variable interest in the legal entity. There are transactions in which a reporting entity has an interest in, or other involvement with, a VIE or potential VIE that is not considered a variable interest, and the reporting entity's related party holds a variable interest in the same VIE or potential VIE. A reporting entity's interest in, or other pecuniary involvement with, a VIE may take many different forms such as a lessee under a leasing arrangement or a party to a supply contract, service contract, or derivative contract. ##### [810-10-25-54](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-54) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:ea3c889cff0e09353e3a86a404df3ed008fa7411e97e78ea2fe74d114d69084c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The reporting entity shall consider whether it holds an implicit variable interest in the VIE or potential VIE. The determination of whether an implicit variable interest exists shall be based on all facts and circumstances in determining whether the reporting entity may absorb variability of the VIE or potential VIE. A reporting entity that holds an implicit variable interest in a VIE and is a related party to other variable interest holders shall apply the guidance in paragraphs [810-10-25-42 through 25-44B](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-42)to determine whether it is the primary beneficiary of the VIE. The guidance in paragraphs [810-10-25-49 through 25-54](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-49) applies to related parties as defined in paragraph [810-10-25-43](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-43). For example, the guidance in paragraphs [810-10-25-49 through 25-54](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-49) applies to any of the following situations: 1. a A reporting entity and a VIE are under common control. 2. b A reporting entity has an interest in, or other involvement with, a VIE and an officer of that reporting entity has a variable interest in the same VIE. 3. c A reporting entity enters into a contractual arrangement with an unrelated third party that has a variable interest in a VIE and that arrangement establishes a related party relationship. ##### [810-10-25-55](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-55) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:7fc1cf2c53e7f277be7de0fe64fe7fc83aad43702b56b408a3193e1f3047524e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A variable interest in specified assets of a VIE (such as a guarantee or subordinated residual interest) shall be deemed to be a variable interest in the VIE only if the fair value of the specified assets is more than half of the total fair value of the VIE's assets or if the holder has another variable interest in the VIE as a whole (except interests that are insignificant or have little or no variability). This exception is necessary to prevent a reporting entity that would otherwise be the primary beneficiary of a VIE from circumventing the requirement for consolidation simply by arranging for other parties with interests in certain assets to hold small or inconsequential interests in the VIE as a whole. The expected losses and expected residual returns applicable to variable interests in specified assets of a VIE shall be deemed to be expected losses and expected residual returns of the VIE only if that variable interest is deemed to be a variable interest in the VIE. ##### [810-10-25-56](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-56) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:687d241bd11b963e6c69d5bf2e921be34f678b7111fb03ac912b3b0a4df42eed Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Expected losses related to variable interests in specified assets are not considered part of the expected losses of the legal entity for purposes of determining the adequacy of the equity at risk in the legal entity or for identifying the primary beneficiary unless the specified assets constitute a majority of the assets of the legal entity. For example, expected losses absorbed by a guarantor of the residual value of underlying asset are not considered expected losses of a VIE if the fair value of the underlying asset is not a majority of the fair value of the VIE's total assets. ##### [810-10-25-57](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-57) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:f92c37404f9aef829588b41c46fe0e2df6cbfbb7f961e3b4b1453057a27ef4a9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A reporting entity with a variable interest in specified assets of a VIE shall treat a portion of the VIE as a separate VIE if the specified assets (and related credit enhancements, if any) are essentially the only source of payment for specified liabilities or specified other interests. (The portions of a VIE referred to in this paragraph are sometimes called silos.) That requirement does not apply unless the legal entity has been determined to be a VIE. If one reporting entity is required to consolidate a discrete portion of a VIE, other variable interest holders shall not consider that portion to be part of the larger VIE. ##### [810-10-25-58](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-58) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:45122bae5fae231dbeab4dc844f8a968f4ecbe1bda7dcb49c283c2c510f7db79 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A specified asset (or group of assets) of a VIE and a related liability secured only by the specified asset or group shall not be treated as a separate VIE (as discussed in the preceding paragraph) if other parties have rights or obligations related to the specified asset or to residual cash flows from the specified asset. A separate VIE is deemed to exist for accounting purposes only if essentially all of the assets, liabilities, and equity of the deemed VIE are separate from the overall VIE and specifically identifiable. In other words, essentially none of the returns of the assets of the deemed VIE can be used by the remaining VIE, and essentially none of the liabilities of the deemed VIE are payable from the assets of the remaining VIE. ##### [810-10-25-59](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-59) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:5bb2c880aaf694fa3ae24e20684d9e68314ee436c8d4e870531dcf15c2cceb28 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Acquisition, development, and construction loan structures](https://asc.understandingaccounting.org/glossary/a/#acquisition-development-and-construction-arrangements "Acquisition, development, or construction arrangements, in which a lender, usually a financial institution, participates in expected residual profit from the sale or refinancing of property.") may be VIEs subject to the guidance in the Variable Interest Entities Subsections. Guidance on determining whether a lender should account for an acquisition, development, and construction arrangement as a loan or as an investment in real estate or a joint venture is presented in Subtopic 310-10. ### Consolidation of Entities Controlled by Contract ##### [810-10-25-60](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-60) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:d0b7d4fd0525abe1833666cf0c24cd07775647e5343faeb3c0ca47c19f956d62 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subsection addresses various considerations related to whether an entity is controlled by contract that is not a [variable interest entity](https://asc.understandingaccounting.org/glossary/v/#variable-interest-entity "A legal entity subject to consolidation according to the provisions of the Variable Interest Entities Subsections of Subtopic 810-10.") (VIE) (see the [Variable Interest Entities Subsection](https://asc.understandingaccounting.org/asc/810/10/#15-scope-and-scope-exceptions) of Section 810-10-15), specifically: 1. a General guidance 2. b Term 3. c Control 4. d Financial interest 5. e Determining whether an employee is an employee of the consolidating entity 6. f Consideration recorded in the period consideration is provided. #### General Guidance ##### [810-10-25-61](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-61) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:63f18efdd4b7d2f1a0e01461414d52a0077242b6e4112f0a46a5038b49d61c86 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The information necessary to evaluate the requirements in paragraph [810-10-15-22](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-22) may or may not be documented in the contractual agreements that underlie the relationship between the physician practice management entity and the physician practice. If the information is documented in those agreements, then that documentation should be used to evaluate whether the requirements are met regardless of whether the respective parties are currently behaving in accordance with the documented provisions. To the extent that some of the information is not documented, then all of the requirements in that paragraph are still applicable; however, the facts and circumstances of the relationship should be evaluated to determine whether the requirements are met. ##### [810-10-25-62](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-62) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:632b274fa66d2d7978370343863fc5c4346b2b133e2eb8bd7b4a59ae35291fb6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Relevant facts and circumstances include the legal rights and obligations of each party absent the documentation and the reasons for any undocumented provisions. With respect to the latter, in a situation in which neither the physician practice management entity nor its nominee owns any of the outstanding voting equity interests of the physician practice, lack of documentation of a right of the physician practice management entity may be caused by the fact that the physician practice shareholders have not transferred that right to the physician practice management entity. This same lack of documentation in a situation in which the physician practice management entity and its nominee collectively own all of the outstanding voting equity instruments of the physician practice may be caused by the fact that there is less discipline to document absent third-party physician practice owners. #### Term ##### [810-10-25-63](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-63) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:1d354417d46c1b3e3f528af44f7e76ec2311d1f18fcc200edbe7306cf11a480e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The term of the arrangement is to be determined based on its substance as opposed to its form; thus, both the original stated contract term and renewal or cancellation provisions must be considered. For example, an arrangement with an initial stated term of 5 years that has a single 5-year renewal option that is unilaterally exercisable by the physician practice management entity is considered to have an adequate term because it is collectively a 10-year contract. ##### [810-10-25-64](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-64) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:a5ccf815c8b037af2dd809408d84ff58fe89a37a6f4b763d957e1e4bf18a1b33 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In the circumstances that are the subject of the Consolidation of Entities Controlled by Contract Subsections, it is appropriate, in being explicit about the duration of the management arrangements, that the term be defined as a period of 10 years or more. Defining the term as a period of 10 years or more is only for purposes of the Consolidation of Entities Controlled by Contract Subsections. It is not intended that a term of 10 years or more be applied in other consolidation situations. #### Control ##### [810-10-25-65](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-65) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:41d0521eb154111e772ba1600ba3977791baf98f2b0ee0aad12482bfabe6c62c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following guidance applies to the evaluation of the control requirement in paragraph [810-10-15-22(b)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-22) for identifying a physician practice management arrangement, or similar contractual management arrangement, as a controlling financial interest: 1. a [Nominee shareholder](https://asc.understandingaccounting.org/glossary/n/#nominee-shareholder "One or more shareholders whose relationship with the physician practice management entity (which can be either the physician practice management entity itself or its controlled subsidiaries) perpetually has all of the following characteristics: Time Frame: The physician practice management entity can at all times establish or effect a change in the nominee shareholder. The physician practice management entity can cause a change in the nominee shareholder an unlimited number of times, that is, changing the nominee shareholder one or more times does not affect the physician practice management entity's ability to change the nominee shareholder again and again. Discretion: The physician practice management entity has sole discretion without cause to establish or change the nominee shareholder. The physician practice management entity can name anyone as a new nominee shareholder (that is, the physician practice management entity's choice of an eligible nominee is not limited). Impact: The physician practice management entity and the nominally owned entity incur no more than a nominal cost to cause a change in the nominee shareholder. Neither the physician practice management entity nor the nominally owned entity is subject to any significant adverse impact upon a change in the nominee shareholder.") situation, presumption of control—need to evaluate more than just the terms of the contractual management agreement 2. b Nominee shareholder situation—need to evaluate more than just the terms of the contractual management agreement 3. c Binding arbitration provisions 4. d Powers limited by law 5. e Scope of service decisions 6. f Physician cosigning provisions. ##### [810-10-25-66](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-66) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:c50eab7cfbebe7e095febb7198587e7197f89d2bee72ef903cc57ed23c8a8452 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a majority of the outstanding voting equity instruments of the physician practice is owned by a nominee shareholder of the physician practice management entity (or by the physician practice management entity itself and its nominee shareholder), then a rebuttable presumption exists that the physician practice management entity controls the physician practice. This presumption is rebutted if others (including any other physician practice shareholders and physicians employed by the physician practice) have been granted rights by the physician practice management entity (either pursuant to the management agreement or through its nominee shareholder; by the physician practice, pursuant to its provisions for corporate governance; and so forth), such that the physician practice management entity does not have exclusive decision-making authority over the decisions that constitute the control requirements. Conversely, the presumption cannot be rebutted if the physician practice management entity has exclusive [decision-making authority](https://asc.understandingaccounting.org/glossary/d/#decision-making-authority "The power to direct the activities of a legal entity that most significantly impact the entity's economic performance according to the provisions of the Variable Interest Entities Subsections of Subtopic 810-10.") over the decisions that constitute those control requirements, whether the physician practice management entity obtained it through the management agreement, through its nominee, or pursuant to the provisions for corporate governance of the physician practice. ##### [810-10-25-67](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-67) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:12cb64ada1bc10f7f80c7341833a3765ca77ce64da2111c6ddeb5c5b3812cda5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If less than a majority of the outstanding voting equity instruments of the physician practice is owned by a nominee shareholder of the physician practice management entity (or by the physician practice management entity itself and the nominee shareholder), then no presumption of control exists. In this circumstance, the physician practice management entity must demonstrate that by virtue of a combination of its rights under the management agreement, by the powers possessed by its nominee shareholder, and by the provisions for corporate governance of the physician practice, it has control by meeting the control requirements. ##### [810-10-25-68](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-68) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:97cef47ef93faf40b298f7e5a936ab0b07b690027ada12e93ae7d8da2f0704be Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A provision for binding arbitration to settle disagreements between the physician practice management entity and the physician practice does not necessarily indicate that the physician practice management entity lacks exclusive authority over all decision making related to the items constituting the control requirements. For example, if binding arbitration is provided only to settle disputes over the meaning of contract terms and those decisions could not have the effect of overriding the physician practice management entity's exclusive decision-making authority over the matters identified in the control requirements, then the physician practice management entity may still comply with those control requirements. Conversely, if binding arbitration is provided to decide matters for which the physician practice management entity is required to have exclusive decision-making authority, then the physician practice management entity would not comply with those control requirements. ##### [810-10-25-69](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-69) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:91f2cb874c592d3cf3a4c309dd45f3f617dbe98bc2e5257aad9fc81d18329fed Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If federal, state, or corresponding non-U.S. laws limit the powers or discretion of any party over a particular decision, then the physician practice management entity's exclusive decision-making authority with respect to that matter is not, by definition, precluded. For example, antidumping statutes that prohibit physicians from refusing certain types of patients do not preclude the physician practice management entity from otherwise exerting exclusive authority of decision making over patient acceptance policies and procedures within the boundaries established by law. ##### [810-10-25-70](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-70) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:f4d7068a9b07be5913fb19e8f48df61bc5b8975462f4ac2eefb05c9bfb912c51 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The physician practice management entity's exclusive decision-making authority over the physician practice's scope of services is not considered refuted if the range of medical disciplines in which the physician practice practices is set by mutual agreement of the physician practice management entity and the physician practice in the initial negotiation of the management agreement. Some examples of different medical disciplines are cardiology, neurology, obstetrics, ophthalmology, and radiology. Lack of physician practice management entity exclusive decision-making authority over initial and ongoing scope of service decisions within the physician practice's selected medical disciplines would, however, preclude a conclusion that the physician practice management entity controls the physician practice. Scope of service decisions within those practice disciplines are, for example, decisions about the range of cardiology services to provide, decisions about the range of neurology services to provide, and so forth. ##### [810-10-25-71](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-71) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:5f8c0dacd163cd69938bb942c0d2b631b0fd5b8ca5f922c0503b6384cfc00a59 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A provision requiring that the physician or physicians cosign a customer contract of the physician practice (that is, in addition to its execution on behalf of the physician practice by the physician practice management entity) does not preclude the physician practice management entity from having exclusive decision-making authority over the execution of contracts if the requirement for the physicians' signature is perfunctory. That requirement would generally be perfunctory if the physicians' execution of contracts creates no obligations for the physicians beyond the obligations that would exist if the physician practice management entity alone executed the contracts and if either of the following conditions is met: 1. a The requirement for the physicians to execute a contract arises from state law or from a request by the payor on a particular contract. 2. b The physicians have no effective discretion in executing contracts negotiated by the physician practice management entity (for example, the management agreement or the employment contract states that the physicians will not unreasonably withhold approval of contracts negotiated by the physician practice management entity). ##### [810-10-25-72](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-72) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:8c2fe7e1eb4e97058e1031217249753c5076b72d678d94f9d09a0415816122ce Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The cosigning requirement is not considered perfunctory (and accordingly the first control requirement is not met) if any one of the following circumstances exists: 1. a It arises out of authority given by the physician practice management entity to the physicians (other than to a physician who is the physician practice management entity's nominee shareholder of the physician practice and is acting in that capacity). 2. b It gives rise to incremental obligations for the physician beyond the obligations that would exist if the physician practice management entity alone executed the contracts. 3. c It gives the physicians discretion over which customer contracts will be executed by the physician practice management entity. This occurs, for example, if the physicians solely decide, or with the physician practice management entity they jointly decide, the boundaries for what constitutes an acceptable customer contract. #### Financial Interest ##### [810-10-25-73](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-73) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:c91b7de708253ce5c406990b3ebb2208ae564fee3c768de60ef8f2e57c8ba807 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following guidance applies to the evaluation of the financial interest requirement in paragraph [810-10-15-22(c)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-22) for identifying a physician practice management arrangement or similar contractual management arrangement as a controlling financial interest: 1. a Nominee shareholder situation, presumption of financial interest—need to evaluate more than just the terms of the contractual management agreement 2. b Nominee shareholder situation—need to evaluate more than just the terms of the contractual management agreement 3. c Type and level of physician practice management entity participation 4. d Level of participation 5. e Substance versus form. ##### [810-10-25-74](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-74) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:6b7815e433156054bec24de9adef65c4a50b97f22749663610312eeb39c1c083 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If both of the following conditions exist, then the physician practice management entity is presumed to have a significant financial interest in the physician practice without reference to its current compliance with the financial interest requirements: 1. a A majority of the outstanding voting equity instruments of the physician practice is owned by a nominee shareholder of the physician practice management entity, or owned by a combination of the physician practice management entity itself and its nominee shareholder. 2. b It is determined that, after considering the rights of, and the physician practice management entity's (and its nominee's) obligations to, others (including any other physician practice shareholders and physicians employed by the physician practice), the physician practice management entity (or its nominee) has the power, at will and for no or only nominal consideration, to reset the terms of the physician practice management entity's financial interest in the physician practice. This presumption is rebutted only if the physician practice management entity is precluded from resetting the terms of its financial interest in the physician practice to a basis that would meet the financial interest requirements, a circumstance that is unlikely to exist. ##### [810-10-25-75](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-75) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:03560f2b0292189ff9738a0834ec7cb681e10eeecf9911ca5116f960d1b84f2b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If less than a majority of the outstanding voting equity instruments of the physician practice is owned by a nominee shareholder of the physician practice management entity, then no presumption of a significant financial interest exists. In this circumstance, the physician practice management entity must demonstrate that by virtue of a combination of its rights under the management agreement and by the powers possessed by its nominee shareholder it has a significant financial interest by meeting the financial interest requirements. ##### [810-10-25-76](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-76) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:73c0c78c5864697c1ab1d1f1fded89969d8bb4804f499f12f65938bef474a61a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A financial interest in a physician practice is the right to share in the change in the fair value of that physician practice. This right must be economically similar to the right a shareholder normally would possess. For purposes of the second financial interest requirement, that change in fair value is viewed as consisting of both of the following components: 1. a The portion of the change that manifests itself as current operating results 2. b The remainder, which is the portion of the change that manifests itself only upon sale or liquidation of the physician practice. ##### [810-10-25-77](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-77) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:ea7fa6f25375f1ace3b44ecd02d089ff1bd09b81cdfe406b35f4f302c31d5491 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The second financial interest requirement requires that the physician practice management entity have rights to share in both components and that the amounts collectively derived constitute a significant portion of the total change in fair value. If the physician practice management entity's arrangement with the physician practice will end before the physician practice is sold or liquidated, the physician practice management entity would need to have the right to share in the change in the fair value of the physician practice that arose during the physician practice management entity's relationship with it in order to meet the requirement described in (b) in the preceding paragraph. ##### [810-10-25-78](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-78) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:92fb9e7c350b8f1baf00f2c3ee21e516906f916b64988b0f49d04dab3e16e8b6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The required significant level of financial interest of the physician practice management entity in the physician practice is intentionally not further prescribed. This is meant to convey that what is significant must be determined in the context of the facts and circumstances. ##### [810-10-25-79](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-79) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:7de42be27d01e93c17715594f59cef8ac9b4c053a199f9c94c6c8e3e84ab7013 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For purposes of determining compliance with the second financial interest requirement, the calculation of ongoing fees and the calculation of proceeds from sale are to be evaluated based on their substance as opposed to their form. Determining whether the requirement is met for a particular management fee structure will require the use of judgment. ##### [810-10-25-80](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-80) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:0859606d7cc11d843261d50e7cc39eeca120b2e5e18eeb61e1854b06176618d4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). #### Consideration Recorded in the Period Consideration Is Provided ##### [810-10-25-81](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-81) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:55.439Z to 2026-09-10T01:28:55.439Z Record version: sha256:86b0a6b24b54ce09a1b3df80477dfa8b20100ed3713bfeddbf496b01918bc111 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Regardless of whether the consolidation status of the physician practice changes, consideration provided by the physician practice management entity to the physician practice in exchange for modifications to the physician practice management entity's arrangement with the physician practice shall be accounted for in the financial reporting period in which the modification is made, that is, the accounting for the consideration shall not be pushed back to a prior period. Furthermore, that consideration shall be recognized under generally accepted accounting principles (GAAP) according to the nature of the consideration. Source downloaded (UTC): 2026-09-10T01:28:57.969Z to 2026-09-10T01:28:57.969Z Record version: sha256:f1a6537f34422b5ce97fe6a50a5a105cb88712ed8f2fe3ea6cc34533a58b5d55 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-10-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/810/10/#30-initial-measurement) SEC content: no ### Variable Interest Entities #### Valuation of Assets, Liabilities, and Noncontrolling Interests in a Newly Consolidated VIE ##### [810-10-30-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:57.969Z to 2026-09-10T01:28:57.969Z Record version: sha256:d8128d86e550fc984fa6b94d73becb7d1495ef1357dc0cabc087208f5b98bffb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the [primary beneficiary](https://asc.understandingaccounting.org/glossary/p/#primary-beneficiary "An entity that consolidates a variable interest entity (VIE). See paragraphs 810-10-25-38 through 25-38J for guidance on determining the primary beneficiary.") of a [variable interest entity](https://asc.understandingaccounting.org/glossary/v/#variable-interest-entity "A legal entity subject to consolidation according to the provisions of the Variable Interest Entities Subsections of Subtopic 810-10.") (VIE) and the VIE are under common control, the primary beneficiary shall initially measure the assets, liabilities, and [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.") of the VIE at amounts at which they are carried in the accounts of the reporting entity that controls the VIE (or would be carried if the reporting entity issued financial statements prepared in conformity with generally accepted accounting principles \[GAAP\]). ##### [810-10-30-2](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-2) Pending content: yes Source downloaded (UTC): 2026-09-10T01:28:57.969Z to 2026-09-10T01:28:57.969Z Record version: sha256:1ba2a19a555a9ef695e0a63762d5000400fa73172e1926f0cce031661e2324fb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The initial consolidation of a VIE that is a [business](https://asc.understandingaccounting.org/glossary/b/#business "Paragraphs 805-10-55-3A805-10-55-4805-10-55-5805-10-55-6 and 805-10-55-8805-10-55-9 define what is considered a business.") is a [business combination](https://asc.understandingaccounting.org/glossary/b/#business-combination "A transaction or other event in which an acquirer obtains control of one or more businesses. Transactions sometimes referred to as true mergers or mergers of equals also are business combinations. See also Acquisition by a Not-for-Profit Entity.") and shall be accounted for in accordance with the provisions in Topic 805. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [805-10-65-5](https://asc.understandingaccounting.org/asc/805/10/#805-10-65-5)The initial consolidation of a VIE that is a [business](https://asc.understandingaccounting.org/glossary/b/#business "Paragraphs 805-10-55-3A805-10-55-4805-10-55-5805-10-55-6 and 805-10-55-8805-10-55-9 define what is considered a business.") in which the primary beneficiary is the accounting [acquirer](https://asc.understandingaccounting.org/glossary/a/#acquirer "The entity that obtains control of the acquiree. However, in a business combination in which a variable interest entity (VIE) is acquired, the primary beneficiary of that entity always is the acquirer. (P) December 16, 2026; (N) December 16, 2026805-10-65-5The entity that obtains control of the acquiree.See paragraphs 805-10-25-4805-10-25-5 for guidance on determining the acquirer.")is a [business combination](https://asc.understandingaccounting.org/glossary/b/#business-combination "A transaction or other event in which an acquirer obtains control of one or more businesses. Transactions sometimes referred to as true mergers or mergers of equals also are business combinations. See also Acquisition by a Not-for-Profit Entity.") and shall be accounted for in accordance with the provisions in Topic 805. If a business combination in which a VIE is acquired is effected primarily by exchanging [equity interests](https://asc.understandingaccounting.org/glossary/e/#equity-interests "Used broadly to mean ownership interests of investor-owned entities; owner, member, or participant interests of mutual entities; and owner or member interests in the net assets of not-for-profit entities."), the factors in paragraphs [805-10-55-12 through 55-15](https://asc.understandingaccounting.org/asc/805/10/#805-10-55-12) shall be considered in determining which entity is the accounting acquirer. If an acquisition transaction is a [reverse acquisition](https://asc.understandingaccounting.org/glossary/r/#reverse-acquisition "An acquisition in which the entity that issues securities (the legal acquirer) is identified as the acquiree for accounting purposes based on the guidance in paragraphs 805-10-55-11805-10-55-12805-10-55-13805-10-55-14805-10-55-15. The entity whose equity interests are acquired (the legal acquiree) must be the acquirer for accounting purposes for the transaction to be considered a reverse acquisition.") and the accounting [acquiree](https://asc.understandingaccounting.org/glossary/a/#acquiree "The business or businesses that the acquirer obtains control of in a business combination. This term also includes a nonprofit activity or business that a not-for-profit acquirer obtains control of in an acquisition by a not-for-profit entity.") meets the definition of a business, the provisions of Subtopic 805-40 shall be applied. For a business combination that is not effected primarily by exchanging equity interests in which a VIE is acquired, the primary beneficiary of that entity is the accounting acquirer. ##### [810-10-30-3](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:57.969Z to 2026-09-10T01:28:57.969Z Record version: sha256:cf560cef2b4afac84d758bc25cb660f41f5f90f589bad8ab8866660ae9b7150d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When a reporting entity becomes the primary beneficiary of a VIE that is not a business, no goodwill shall be recognized. The primary beneficiary initially shall measure and recognize the assets (except for goodwill) and liabilities of the VIE in accordance with Sections 805-20-25 and 805-20-30. However, the primary beneficiary initially shall measure assets and liabilities that it has transferred to that VIE at, after, or shortly before the date that the reporting entity became the primary beneficiary at the same amounts at which the assets and liabilities would have been measured if they had not been transferred. No gain or loss shall be recognized because of such transfers. ##### [810-10-30-3A](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-3A) Pending content: yes Source downloaded (UTC): 2026-09-10T01:28:57.969Z to 2026-09-10T01:28:57.969Z Record version: sha256:79e90cbc5ea7439875b6ae1d8d4eb2a64736488511b9047522e8536c5e547efd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [326-10-65-7](https://asc.understandingaccounting.org/asc/326/10/#326-10-65-7)A reporting entity that recognizes loans within the scope of Subtopic 326-20 on financial instruments measured at amortized cost through the consolidation of a VIE that is not a business in accordance with paragraph [810-10-30-3](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-3) shall apply the guidance in paragraph [326-20-30-16](https://asc.understandingaccounting.org/asc/326/20/#326-20-30-16). ##### [810-10-30-4](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:57.969Z to 2026-09-10T01:28:57.969Z Record version: sha256:286062dd33c6977e9659fabaf6d8f193e5b01d98d10dc9dea9667c76bb7c427c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The primary beneficiary of a VIE that is not a business shall recognize a gain or loss for the difference between (a) and (b): 1. a The sum of: 1. 1 The fair value of any consideration paid 2. 2 The fair value of any noncontrolling interests 3. 3 The reported amount of any previously held interests 2. b The net amount of the VIE's identifiable assets and liabilities recognized and measured in accordance with Topic 805. 1. 1 [Subparagraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). 2. 2 [Subparagraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). 3. 3 [Subparagraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [810-10-30-5](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:57.969Z to 2026-09-10T01:28:57.969Z Record version: sha256:6e0a370ffde686e4388585332ea46195644e1f2b26e016c366a078a3c3eba970 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [810-10-30-3 through 30-4](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-3) shall not apply to a [joint venture](https://asc.understandingaccounting.org/glossary/j/#joint-venture "An entity owned and operated by a small group of businesses (the joint venturers) as a separate and specific business or project for the mutual benefit of the members of the group. A government may also be a member of the group. The purpose of a joint venture frequently is to share risks and rewards in developing a new market, product, or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. A joint venture also usually provides an arrangement under which each joint venturer may participate, directly or indirectly, in the overall management of the joint venture. Joint venturers thus have an interest or relationship other than as passive investors. An entity that is a subsidiary of one of the joint venturers is not a joint venture. The ownership of a joint venture seldom changes, and its equity interests usually are not traded publicly. A minority public ownership, however, does not preclude an entity from being a joint venture. As distinguished from a corporate joint venture, a joint venture is not limited to corporate entities.") reporting entity that becomes the primary beneficiary of a VIE that is not a business upon a joint venture formation accounted for in accordance with Subtopic 805-60. ##### [810-10-30-6](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:57.969Z to 2026-09-10T01:28:57.969Z Record version: sha256:50dd97cb37a56f1308e03ee7f08ed1817e9250fa540f8bc08e668e1cd9341485 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). #### Initial Consolidation when Earlier Consolidation Was Prevented Due to Lack of Information ##### [810-10-30-7](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:57.969Z to 2026-09-10T01:28:57.969Z Record version: sha256:b66f62e182b989333710576fdb9c8395618b14d35fbc147d1b9d9c5e45fe34ea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A reporting entity that has not applied the Variable Interest Entities Subsections to a [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.") because of the condition described in paragraph [810-10-15-17(c)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17) and that subsequently obtains the information necessary to apply the Variable Interest Entities Subsections to that entity shall apply the provisions of the Variable Interest Entities Subsections as of the date the information is acquired in accordance with the following paragraph. ##### [810-10-30-8](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:57.969Z to 2026-09-10T01:28:57.969Z Record version: sha256:f03d9ce2584b5770bd6a468731c35b65f8fd7d3feb5a5718126af920c29175a6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The initial measurement by a consolidating entity of the assets, liabilities, and noncontrolling interests of the VIE at the date the requirements of the Variable Interest Entities Subsections first apply depends on whether the determination of their carrying amounts is practicable. In this context, _carrying amounts_ refers to the amounts at which the assets, liabilities, and noncontrolling interests would have been carried in the consolidated financial statements if the Variable Interest Entities Subsections had been effective when the reporting entity first met the conditions to be the primary beneficiary. ##### [810-10-30-8A](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-8A) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:57.969Z to 2026-09-10T01:28:57.969Z Record version: sha256:83396cf5a3e261d5774b2d61be827f5e92009b8960ce75760964a15934d7fc4d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If determining the carrying amounts is practicable, the consolidating entity shall initially measure the assets, liabilities, and noncontrolling interests of the VIE at their carrying amounts at the date the Variable Interest Entities Subsections first apply. ##### [810-10-30-8B](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-8B) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:57.969Z to 2026-09-10T01:28:57.969Z Record version: sha256:f845487643503671ba7e06a2e7bb70614888edd18c4ccfbead07b62c7363e208 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If determining the carrying amounts is not practicable, the assets, liabilities, and noncontrolling interests of the VIE shall be measured at fair value at the date the Variable Interest Entities Subsections first apply. However, as an alternative to this fair value measurement requirement, the assets and liabilities of the VIE may be measured at their unpaid principal balances at the date the Variable Interest Entities Subsections first apply if both of the following conditions are met: 1. a The activities of the VIE are primarily related to securitizations or other forms of asset-backed financings. 2. b The assets of the VIE can be used only to settle obligations of the entity. ##### [810-10-30-8C](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-8C) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:57.969Z to 2026-09-10T01:28:57.969Z Record version: sha256:c964fe9c17385f8d5c379864b1f13efc22528bde6f42ab3e455250e199b90729 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The measurement alternative in the preceding paragraph does not obviate the need for the primary beneficiary to recognize any accrued interest or record an allowance for credit losses, as appropriate. Other assets, liabilities, or noncontrolling interests, if any, that do not have an unpaid principal balance, and any items that are required to be carried at fair value under other applicable standards, shall be measured at fair value. ##### [810-10-30-8D](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-8D) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:57.969Z to 2026-09-10T01:28:57.969Z Record version: sha256:427c094ab7eacbf275e292745cf43bc627bfc709bcad081c4b5f50efdc55c9b1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Any difference between the net amount added to the balance sheet of the consolidating entity and the amount of any previously recognized interest in the newly consolidated VIE shall be recognized as a cumulative-effect adjustment to retained earnings. ##### [810-10-30-9](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:57.969Z to 2026-09-10T01:28:57.969Z Record version: sha256:ac3c0aa4998ececc1dfd02852f44155b83d387c0531237989e5f4010f4e108de Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Variable Interest Entities Subsections may be applied retrospectively in previously issued financial statements for one or more years with a cumulative-effect adjustment to retained earnings as of the beginning of the first year restated. #### Collateralized Financing Entities ##### [810-10-30-10](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:57.969Z to 2026-09-10T01:28:57.969Z Record version: sha256:2d53d6b02c439dcad171350c86bbe03a8e18ef17593629b583b11b0496a4a0ad Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When a reporting entity initially consolidates a [variable interest entity](https://asc.understandingaccounting.org/glossary/v/#variable-interest-entity "A legal entity subject to consolidation according to the provisions of the Variable Interest Entities Subsections of Subtopic 810-10.") that is a [collateralized financing entity](https://asc.understandingaccounting.org/glossary/c/#collateralized-financing-entity "A variable interest entity that holds financial assets, issues beneficial interests in those financial assets, and has no more than nominal equity. The beneficial interests have contractual recourse only to the related assets of the collateralized financing entity and are classified as financial liabilities. A collateralized financing entity may hold nonfinancial assets temporarily as a result of default by the debtor on the underlying debt instruments held as assets by the collateralized financing entity or in an effort to restructure the debt instruments held as assets by the collateralized financing entity. A collateralized financing entity also may hold other financial assets and financial liabilities that are incidental to the operations of the collateralized financing entity and have carrying values that approximate fair value (for example, cash, broker receivables, or broker payables).") that meets the scope requirements in paragraph [810-10-15-17D](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17D), it may elect to measure the financial assets and the financial liabilities of the collateralized financing entity using a measurement alternative to Topic 820 on fair value measurement. ##### [810-10-30-11](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:57.969Z to 2026-09-10T01:28:57.969Z Record version: sha256:85c8983941a2f75dcbb358bb86dd7c13292d991ea7dc2d82e3f2b4d7926973bd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under the measurement alternative, the reporting entity shall measure both the financial assets and the financial liabilities of the collateralized financing entity using the more observable of the fair value of the financial assets and the fair value of the financial liabilities. Any gain or loss that results from the initial application of this measurement alternative shall be reflected in earnings and attributed to the reporting entity in the consolidated statement of income (loss). ##### [810-10-30-12](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:57.969Z to 2026-09-10T01:28:57.969Z Record version: sha256:1bb1a734bed426a82e4da8e7bbaed7a8fa780aab8528b7e8ec6bfb178ddf9b59 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the fair value of the financial assets of the [collateralized financing entity](https://asc.understandingaccounting.org/glossary/c/#collateralized-financing-entity "A variable interest entity that holds financial assets, issues beneficial interests in those financial assets, and has no more than nominal equity. The beneficial interests have contractual recourse only to the related assets of the collateralized financing entity and are classified as financial liabilities. A collateralized financing entity may hold nonfinancial assets temporarily as a result of default by the debtor on the underlying debt instruments held as assets by the collateralized financing entity or in an effort to restructure the debt instruments held as assets by the collateralized financing entity. A collateralized financing entity also may hold other financial assets and financial liabilities that are incidental to the operations of the collateralized financing entity and have carrying values that approximate fair value (for example, cash, broker receivables, or broker payables).") is more observable, those financial assets shall be measured at fair value. The financial liabilities shall be measured in the initial consolidation as the difference between the following two amounts: 1. a The sum of: 1. 1 The fair value of the financial assets 2. 2 The carrying value of any nonfinancial assets held temporarily 2. b The sum of: 1. 1 The fair value of any [beneficial interests](https://asc.understandingaccounting.org/glossary/b/#beneficial-interests "Rights to receive all or portions of specified cash inflows received by a trust or other entity, including, but not limited to, all of the following: Senior and subordinated shares of interest, principal, or other cash inflows to be passed-through or paid-through Premiums due to guarantors Commercial paper obligations Residual interests, whether in the form of debt or equity.") retained by the reporting entity (other than those that represent compensation for services) 2. 2 The reporting entity's carrying value of any beneficial interests that represent compensation for services. The fair value of the financial assets in (a)(1) should include the carrying values of any financial assets that are incidental to the operations of the collateralized financing entity because the financial assets' carrying values approximate their fair values. ##### [810-10-30-13](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:57.969Z to 2026-09-10T01:28:57.969Z Record version: sha256:6221b6a8be3dcf9a6e63d9eecf0baa4a80297445795261d43c3ec639e32a7392 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the fair value of the financial liabilities of the collateralized financing entity is more observable, those financial liabilities shall be measured at fair value. The financial assets shall be measured in the initial consolidation as the difference between the following two amounts: 1. a The sum of: 1. 1 The fair value of the financial liabilities (other than the beneficial interests retained by the reporting entity) 2. 2 The fair value of any beneficial interests retained by the reporting entity (other than those that represent compensation for services) 3. 3 The reporting entity's carrying value of any beneficial interests that represent compensation for services 2. b The carrying value of any nonfinancial assets held temporarily. The fair value of the financial liabilities in (a)(1) should include the carrying values of any financial liabilities that are incidental to the operations of the collateralized financing entity because the financial liabilities' carrying values approximate their fair values. ##### [810-10-30-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:57.969Z to 2026-09-10T01:28:57.969Z Record version: sha256:db576f7cdeb4717fc15e78be0d872cbb009712f68779c469a692567596d9f971 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amount resulting from paragraph [810-10-30-12](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-12) or paragraph [810-10-30-13](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-13) shall be allocated to the less observable of the financial assets and financial liabilities (other than the beneficial interests retained by the reporting entity), as applicable, using a reasonable and consistent methodology. ##### [810-10-30-15](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:57.969Z to 2026-09-10T01:28:57.969Z Record version: sha256:5d51ca42d9298859b3efb4caec69a4dececf5a179acfa617c4cb7e4b9cd17db4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The carrying value of the beneficial interests that represent compensation for services (for example, rights to receive management fees or servicing fees) and the carrying value of any nonfinancial assets held temporarily by the [collateralized financing entity](https://asc.understandingaccounting.org/glossary/c/#collateralized-financing-entity "A variable interest entity that holds financial assets, issues beneficial interests in those financial assets, and has no more than nominal equity. The beneficial interests have contractual recourse only to the related assets of the collateralized financing entity and are classified as financial liabilities. A collateralized financing entity may hold nonfinancial assets temporarily as a result of default by the debtor on the underlying debt instruments held as assets by the collateralized financing entity or in an effort to restructure the debt instruments held as assets by the collateralized financing entity. A collateralized financing entity also may hold other financial assets and financial liabilities that are incidental to the operations of the collateralized financing entity and have carrying values that approximate fair value (for example, cash, broker receivables, or broker payables).") shall be measured in accordance with other applicable Topics. ##### [810-10-30-16](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:28:57.969Z to 2026-09-10T01:28:57.969Z Record version: sha256:749b1fd0cced50a207ab908de855896501506180dd81f2641ea5ce8e1694973b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a reporting entity does not elect to apply the measurement alternative to a collateralized financing entity that meets the scope requirements in paragraph [810-10-15-17D](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17D), the reporting entity shall measure the fair value of the financial assets and the fair value of the financial liabilities of the collateralized financing entity using the requirements of Topic 820 on fair value measurement. If Topic 820 is applied, any initial difference in the fair value of the financial assets and the fair value of the financial liabilities of the collateralized financing entity shall be reflected in earnings and attributed to the reporting entity in the consolidated statement of income (loss). Source downloaded (UTC): 2026-09-10T01:29:00.226Z to 2026-09-10T01:29:00.226Z Record version: sha256:4e9df16e34870920e6ddb8f936320c927f45cf28eb9162035ef1124f60445be2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-10-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/810/10/#35-subsequent-measurement) SEC content: no ##### [810-10-35-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:00.226Z to 2026-09-10T01:29:00.226Z Record version: sha256:32ac6e39f407075b8c917fa3ea31fec9299357763bf846c1459095b9074d9381 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [810-10-35-2](https://asc.understandingaccounting.org/asc/810/10/#810-10-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:00.226Z to 2026-09-10T01:29:00.226Z Record version: sha256:d9c4fcd3821395869d75225bc858748d7f551bf30797f48c6d27fcb3809d5cc4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ### Variable Interest Entities ##### [810-10-35-3](https://asc.understandingaccounting.org/asc/810/10/#810-10-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:00.226Z to 2026-09-10T01:29:00.226Z Record version: sha256:e7be7304b85cdfe486fe7de842dc477d77ec3beb378ce8d57ce5fe3b29b26d33 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The principles of [consolidated financial statements](https://asc.understandingaccounting.org/glossary/c/#consolidated-financial-statements "The financial statements of a consolidated group of entities that include a parent and all its subsidiaries presented as those of a single economic entity.") in this Topic apply to primary beneficiaries' accounting for consolidated [variable interest entities](https://asc.understandingaccounting.org/glossary/v/#variable-interest-entity "A legal entity subject to consolidation according to the provisions of the Variable Interest Entities Subsections of Subtopic 810-10.") (VIEs). After the initial measurement, the assets, liabilities, and [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.") of a consolidated VIE shall be accounted for in consolidated financial statements as if the VIE were consolidated based on voting interests. Any specialized accounting requirements applicable to the type of business in which the VIE operates shall be applied as they would be applied to a consolidated [subsidiary](https://asc.understandingaccounting.org/glossary/s/#subsidiary "An entity, including an unincorporated entity such as a partnership or trust, in which another entity, known as its parent, holds a controlling financial interest. (Also, a variable interest entity that is consolidated by a primary beneficiary.)"). The consolidated entity shall follow the requirements for elimination of intra-entity balances and transactions and other matters described in Section 810-10-45 and paragraphs [810-10-50-1 through 50-1B](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-1) and existing practices for consolidated subsidiaries. Fees or other sources of income or expense between a [primary beneficiary](https://asc.understandingaccounting.org/glossary/p/#primary-beneficiary "An entity that consolidates a variable interest entity (VIE). See paragraphs 810-10-25-38 through 25-38J for guidance on determining the primary beneficiary.") and a consolidated VIE shall be eliminated against the related expense or income of the VIE. The resulting effect of that elimination on the net income or expense of the VIE shall be attributed to the primary beneficiary (and not to noncontrolling interests) in the consolidated financial statements. #### Reconsideration of Initial Determination of VIE Status ##### [810-10-35-4](https://asc.understandingaccounting.org/asc/810/10/#810-10-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:00.226Z to 2026-09-10T01:29:00.226Z Record version: sha256:87aa832cc356501d538177346a03d3843fa643c8d0318ea595e77d01a383b693 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A legal entity that previously was not subject to the Variable Interest Entities Subsections shall not become subject to them simply because of losses in excess of its [expected losses](https://asc.understandingaccounting.org/glossary/e/#expected-losses "A legal entity that has no history of net losses and expects to continue to be profitable in the foreseeable future can be a variable interest entity (VIE). A legal entity that expects to be profitable will have expected losses. A VIE's expected losses are the expected negative variability in the fair value of its net assets exclusive of variable interests and not the anticipated amount or variability of the net income or loss.") that reduce the equity investment. The initial determination of whether a legal entity is a VIE shall be reconsidered if any of the following occur: 1. a The legal entity's governing documents or contractual arrangements are changed in a manner that changes the characteristics or adequacy of the legal entity's equity investment at risk. 2. b The equity investment or some part thereof is returned to the equity investors, and other interests become exposed to expected losses of the legal entity. 3. c The legal entity undertakes additional activities or acquires additional assets, beyond those that were anticipated at the later of the inception of the entity or the latest reconsideration event, that increase the entity's expected losses. 4. d The legal entity receives an additional equity investment that is at risk, or the legal entity curtails or modifies its activities in a way that decreases its expected losses. 5. e Changes in facts and circumstances occur such that the holders of the equity investment at risk, as a group, lose the power from voting rights or similar rights of those investments to direct the activities of the entity that most significantly impact the entity's economic performance. ##### [810-10-35-5](https://asc.understandingaccounting.org/asc/810/10/#810-10-35-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:00.226Z to 2026-09-10T01:29:00.226Z Record version: sha256:ceb2c18028cdbe5cbe7f704c8b6ac98808ffd4f610835a82e54b35cb6e04dfd3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). #### Collateralized Financing Entities ##### [810-10-35-6](https://asc.understandingaccounting.org/asc/810/10/#810-10-35-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:00.226Z to 2026-09-10T01:29:00.226Z Record version: sha256:1c18e44093fabc61c798896ccc698324bc2b2c0fa9e77abe04de332041792aea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A reporting entity that elects to apply the measurement alternative to Topic 820 on fair value measurement upon initial consolidation of a [collateralized financing entity](https://asc.understandingaccounting.org/glossary/c/#collateralized-financing-entity "A variable interest entity that holds financial assets, issues beneficial interests in those financial assets, and has no more than nominal equity. The beneficial interests have contractual recourse only to the related assets of the collateralized financing entity and are classified as financial liabilities. A collateralized financing entity may hold nonfinancial assets temporarily as a result of default by the debtor on the underlying debt instruments held as assets by the collateralized financing entity or in an effort to restructure the debt instruments held as assets by the collateralized financing entity. A collateralized financing entity also may hold other financial assets and financial liabilities that are incidental to the operations of the collateralized financing entity and have carrying values that approximate fair value (for example, cash, broker receivables, or broker payables).") that meets the scope requirements in paragraph [810-10-15-17D](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17D) shall consistently apply the measurement alternative for the subsequent measurement of the financial assets and the financial liabilities of that consolidated collateralized financing entity provided that it continues to meet the scope requirements in paragraph [810-10-15-17D](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17D). If a collateralized financing entity subsequently fails to meet the scope requirements, a reporting entity shall no longer apply the measurement alternative to that collateralized financing entity. Instead, it shall apply Topic 820 to measure those financial assets and financial liabilities that were previously measured using the measurement alternative. ##### [810-10-35-7](https://asc.understandingaccounting.org/asc/810/10/#810-10-35-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:00.226Z to 2026-09-10T01:29:00.226Z Record version: sha256:cbf606e7b4e8c626c458e4ab29b572e5cd78cae36becfa71970147e6179aa046 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under the measurement alternative, a reporting entity shall measure both the financial assets and the financial liabilities of the collateralized financing entity using the more observable of the fair value of the financial assets and the fair value of the financial liabilities, as described in paragraphs [810-10-30-12 through 30-15](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-12) . ##### [810-10-35-8](https://asc.understandingaccounting.org/asc/810/10/#810-10-35-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:00.226Z to 2026-09-10T01:29:00.226Z Record version: sha256:f50f0cbb452e70a1b2df42ccfbe06a1b7b0ec04c43b874f71067272cc788e634 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A reporting entity that applies the measurement alternative shall recognize in its earnings all amounts that reflect its own economic interests in the consolidated [collateralized financing entity](https://asc.understandingaccounting.org/glossary/c/#collateralized-financing-entity "A variable interest entity that holds financial assets, issues beneficial interests in those financial assets, and has no more than nominal equity. The beneficial interests have contractual recourse only to the related assets of the collateralized financing entity and are classified as financial liabilities. A collateralized financing entity may hold nonfinancial assets temporarily as a result of default by the debtor on the underlying debt instruments held as assets by the collateralized financing entity or in an effort to restructure the debt instruments held as assets by the collateralized financing entity. A collateralized financing entity also may hold other financial assets and financial liabilities that are incidental to the operations of the collateralized financing entity and have carrying values that approximate fair value (for example, cash, broker receivables, or broker payables)."), including both of the following: 1. a The changes in the fair value of any beneficial interests retained by the reporting entity (other than those that represent compensation for services) 2. b Beneficial interests that represent compensation for services (for example, management fees or servicing fees). ##### [810-10-35-9](https://asc.understandingaccounting.org/asc/810/10/#810-10-35-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:00.226Z to 2026-09-10T01:29:00.226Z Record version: sha256:f498ae374fec95019a56983774d86ba0cf4090bd9f7f3346e9d31747d746c7fe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a reporting entity does not apply the measurement alternative to a collateralized financing entity that meets the scope requirements in paragraph [810-10-15-17D](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17D), the reporting entity shall measure the fair value of the financial assets and the fair value of the financial liabilities of the collateralized financing entity using the requirements of Topic 820 on fair value measurement. If Topic 820 is applied, any subsequent changes in the fair value of the financial assets and the changes in the fair value of the financial liabilities of the collateralized financing entity shall be reflected in earnings and attributed to the reporting entity in the consolidated statement of income (loss). Source downloaded (UTC): 2026-09-10T01:29:02.168Z to 2026-09-10T01:29:02.168Z Record version: sha256:a79008469bb6e2faea30e3097f569bc0943fafb5c308b4debe98bbeea7017769 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-10-40: 40 Derecognition [Read section](https://asc.understandingaccounting.org/asc/810/10/#40-derecognition) SEC content: no #### Redemption of Subsidiary's Redeemable Stock ##### [810-10-40-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-40-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:02.168Z to 2026-09-10T01:29:02.168Z Record version: sha256:e0587b301bb0e6288691ebae0b9c759dee9a8f7e02fb23bfe43fc27e25048bdb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Accounting for the purchase (early extinguishment) of a wholly owned [subsidiary's](https://asc.understandingaccounting.org/glossary/s/#subsidiary "An entity, including an unincorporated entity such as a partnership or trust, in which another entity, known as its parent, holds a controlling financial interest. (Also, a variable interest entity that is consolidated by a primary beneficiary.)") mandatorily redeemable preferred stock, including stock that contains a redemption feature but is not considered a mandatorily redeemable financial instrument under Topic 480, differs dependent on whether the preferred stock is required under Topic 480 to be accounted for as a liability. ##### [810-10-40-2](https://asc.understandingaccounting.org/asc/810/10/#810-10-40-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:02.168Z to 2026-09-10T01:29:02.168Z Record version: sha256:a156b5461a633c0e5d8e4eb911bd49e1beca5c37db0a6d86005bbe98debeb741 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Section 480-10-25 does not require mandatorily redeemable preferred stock to be accounted for as a liability under certain conditions. If such conditions apply and the mandatorily redeemable preferred stock is not accounted for as a liability, then the entity's acquisition of a subsidiary's mandatorily redeemable preferred stock shall be accounted for as a capital stock transaction. Accordingly, the consolidated entity would not recognize in its income statement any gain or loss from the acquisition of the subsidiary's preferred stock. In the [consolidated financial statements](https://asc.understandingaccounting.org/glossary/c/#consolidated-financial-statements "The financial statements of a consolidated group of entities that include a parent and all its subsidiaries presented as those of a single economic entity."), the dividends on a subsidiary's preferred stock, whether mandatorily redeemable or not, would be included in noncontrolling interest as a charge against income. ##### [810-10-40-2A](https://asc.understandingaccounting.org/asc/810/10/#810-10-40-2A) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:02.168Z to 2026-09-10T01:29:02.168Z Record version: sha256:ce6ba6befa6c746f6197d5cc4a7af7ccde7534721838dbeafb78c5f7d43ac8e1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Section 480-10-25 requires mandatorily redeemable preferred stock to be accounted for as a liability under certain conditions. If mandatorily redeemable preferred stock is accounted for as a liability, then any amounts paid or to be paid to holders of those contracts in excess of the initial measurement amount are reflected as interest cost and not as [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.") charge. Topic 860 specifies whether a liability has been extinguished and Subtopic 470-50 requires that the [parent](https://asc.understandingaccounting.org/glossary/p/#parent "An entity that has a controlling financial interest in one or more subsidiaries. (Also, an entity that is the primary beneficiary of a variable interest entity.)") recognize a gain or loss upon extinguishment of the subsidiary's liability for mandatorily redeemable preferred shares for any difference between the carrying amount and the redemption amount. ##### [810-10-40-3](https://asc.understandingaccounting.org/asc/810/10/#810-10-40-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:02.168Z to 2026-09-10T01:29:02.168Z Record version: sha256:68fa36a62ca4c460ca9d4bb29a56132e8af815a7c000c7674ba0d43cd07e28b0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). #### Deconsolidation of a Subsidiary or Derecognition of a Group of Assets ##### [810-10-40-3A](https://asc.understandingaccounting.org/asc/810/10/#810-10-40-3A) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:02.168Z to 2026-09-10T01:29:02.168Z Record version: sha256:3bd97bf1d157c0f12d4d38fca0c484ab1dbe74b031c9aa0fbe602d3cefd8ece8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The deconsolidation and derecognition guidance in this Section applies to the following: 1. a A subsidiary that is a [nonprofit activity](https://asc.understandingaccounting.org/glossary/n/#nonprofit-activity "An integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing benefits, other than goods or services at a profit or profit equivalent, as a fulfillment of an entity's purpose or mission (for example, goods or services to beneficiaries, customers, or members). As with a not-for-profit entity, a nonprofit activity possesses characteristics that distinguish it from a business or a for-profit business entity.") or a business, except for either of the following: 1. 1 [Subparagraph superseded by Accounting Standards Update No. 2017-05](https://asc.understandingaccounting.org/updates/asu-2017-05/). 2. 2 A conveyance of oil and gas mineral rights (for guidance on conveyances of oil and gas mineral rights and related transactions, see Subtopic 932-360) 3. 3 A transfer of a good or service in a [contract](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") with a [customer](https://asc.understandingaccounting.org/glossary/c/#customer "A party that has contracted with an entity to obtain goods or services that are an output of the entity's ordinary activities in exchange for consideration.") within the scope of Topic 606. 2. b A group of assets that is a nonprofit activity or a business, except for either of the following: 1. 1 [Subparagraph superseded by Accounting Standards Update No. 2017-05](https://asc.understandingaccounting.org/updates/asu-2017-05/). 2. 2 A conveyance of oil and gas mineral rights (for guidance on conveyances of oil and gas mineral rights and related transactions, see Subtopic 932-360) 3. 3 A transfer of a good or service in a contract with a customer within the scope of Topic 606. 3. c A subsidiary that is not a nonprofit activity or a business if the substance of the transaction is not addressed directly by guidance in other Topics that include, but are not limited to, all of the following: 1. 1 Topic 606 on [revenue](https://asc.understandingaccounting.org/glossary/r/#revenue "Inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major or central operations.") from contracts with customers 2. 2 Topic 845 on exchanges of nonmonetary assets 3. 3 Topic 860 on transferring and servicing financial assets 4. 4 Topic 932 on conveyances of mineral rights and related transactions 5. 5 Subtopic 610-20 on gains and losses from the derecognition of nonfinancial assets. ##### [810-10-40-3B](https://asc.understandingaccounting.org/asc/810/10/#810-10-40-3B) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:02.168Z to 2026-09-10T01:29:02.168Z Record version: sha256:4f3fed0e0b6d573f61564db700578841921dfb3291c3f7f3b8e41dc9b6f14c4f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-05](https://asc.understandingaccounting.org/updates/asu-2017-05/). ##### [810-10-40-4](https://asc.understandingaccounting.org/asc/810/10/#810-10-40-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:02.168Z to 2026-09-10T01:29:02.168Z Record version: sha256:f9a5cc129acac5844ced250e35227dc3e7d1b04271ab776af640357e6c18db5c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A parent shall deconsolidate a subsidiary or derecognize a group of assets specified in paragraph [810-10-40-3A](https://asc.understandingaccounting.org/asc/810/10/#810-10-40-3A) as of the date the parent ceases to have a controlling financial interest in that subsidiary or group of assets. See paragraph [810-10-55-4A](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4A) for related implementation guidance. ##### [810-10-40-4A](https://asc.understandingaccounting.org/asc/810/10/#810-10-40-4A) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:02.168Z to 2026-09-10T01:29:02.168Z Record version: sha256:024c1eb806681f5454eb8fdb792b13288eac177ea77c8bebf371dfb9b664e082 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When a parent deconsolidates a subsidiary or derecognizes a group of assets within the scope of paragraph [810-10-40-3A](https://asc.understandingaccounting.org/asc/810/10/#810-10-40-3A), the parent relationship ceases to exist. The parent no longer controls the subsidiary's assets and liabilities or the group of assets. The parent therefore shall derecognize the assets, liabilities, and equity components related to that subsidiary or group of assets. The equity components will include any noncontrolling interest as well as amounts previously recognized in accumulated other comprehensive income. If the subsidiary or group of assets being deconsolidated or derecognized is a [foreign entity](https://asc.understandingaccounting.org/glossary/f/#foreign-entity "An operation (for example, subsidiary, division, branch, joint venture, and so forth) whose financial statements are both: Prepared in a currency other than the reporting currency of the reporting entity Combined or consolidated with or accounted for on the equity basis in the financial statements of the reporting entity.") (or represents the complete or substantially complete liquidation of the foreign entity in which it resides), then the amount of accumulated other comprehensive income that is reclassified and included in the calculation of gain or loss shall include any foreign currency translation adjustment related to that foreign entity. For guidance on derecognizing foreign currency translation adjustments recorded in accumulated other comprehensive income, see Section 830-30-40. ##### [810-10-40-5](https://asc.understandingaccounting.org/asc/810/10/#810-10-40-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:02.168Z to 2026-09-10T01:29:02.168Z Record version: sha256:d235ea63d2db2388d3d01f0bf30538b1269b8fd8de5339fcf469d35930045c89 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a parent deconsolidates a subsidiary or derecognizes a group of assets through a [nonreciprocal transfer](https://asc.understandingaccounting.org/glossary/n/#nonreciprocal-transfer "Nonreciprocal transfer is a transfer of assets or services in one direction, either from an entity to its owners (whether or not in exchange for their ownership interests) or to another entity, or from owners or another entity to the entity. An entity's reacquisition of its outstanding stock is an example of a nonreciprocal transfer.") to [owners](https://asc.understandingaccounting.org/glossary/o/#owners "Used broadly to include holders of ownership interests (equity interests) of investor-owned entities, mutual entities, or not-for-profit entities. Owners include shareholders, partners, proprietors, or members or participants of mutual entities. Owners also include owner and member interests in the net assets of not-for-profit entities."), such as a spinoff, the accounting guidance in Subtopic 845-10 applies. Otherwise, a parent shall account for the deconsolidation of a subsidiary or derecognition of a group of assets specified in paragraph [810-10-40-3A](https://asc.understandingaccounting.org/asc/810/10/#810-10-40-3A) by recognizing a gain or loss in net income attributable to the parent, measured as the difference between: 1. a The aggregate of all of the following: 1. 1 The fair value of any consideration received 2. 2 The fair value of any retained noncontrolling investment in the former subsidiary or group of assets at the date the subsidiary is deconsolidated or the group of assets is derecognized 3. 3 The carrying amount of any noncontrolling interest in the former subsidiary (including any accumulated other comprehensive income attributable to the noncontrolling interest) at the date the subsidiary is deconsolidated. 2. b The carrying amount of the former subsidiary's assets and liabilities or the carrying amount of the group of assets. ##### [810-10-40-6](https://asc.understandingaccounting.org/asc/810/10/#810-10-40-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:02.168Z to 2026-09-10T01:29:02.168Z Record version: sha256:4145fdbade3eea26278b581fec62a1cbbb718e2015ad16c86df3e09e9fe0de6f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A parent may cease to have a controlling financial interest in a subsidiary through two or more arrangements (transactions). Circumstances sometimes indicate that the multiple arrangements should be accounted for as a single transaction. In determining whether to account for the arrangements as a single transaction, a parent shall consider all of the terms and conditions of the arrangements and their economic effects. Any of the following may indicate that the parent should account for the multiple arrangements as a single transaction: 1. aThey are entered into at the same time or in contemplation of one another. 2. bThey form a single transaction designed to achieve an overall commercial effect. 3. cThe occurrence of one arrangement is dependent on the occurrence of at least one other arrangement. 4. dOne arrangement considered on its own is not economically justified, but they are economically justified when considered together. An example is when one disposal is priced below market, compensated for by a subsequent disposal priced above market. Source downloaded (UTC): 2026-09-10T01:29:05.202Z to 2026-09-10T01:29:05.202Z Record version: sha256:af6eca44eb39b30f1652acf716510b1e3dc86b80d8867d615b9ee8ef66622d1b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-10-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/810/10/#45-other-presentation-matters) SEC content: no #### Procedures ##### [810-10-45-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:05.202Z to 2026-09-10T01:29:05.202Z Record version: sha256:5bbd690ad2f364ff30ba503c02039af2144ee7ba1f90c4fe761580cb299a7b53 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In the preparation of [consolidated financial statements](https://asc.understandingaccounting.org/glossary/c/#consolidated-financial-statements "The financial statements of a consolidated group of entities that include a parent and all its subsidiaries presented as those of a single economic entity."), intra-entity balances and transactions shall be eliminated. This includes intra-entity open account balances, security holdings, sales and purchases, interest, dividends, and so forth. As consolidated financial statements are based on the assumption that they represent the financial position and operating results of a single economic entity, such statements shall not include gain or loss on transactions among the entities in the [consolidated group](https://asc.understandingaccounting.org/glossary/c/#consolidated-group "A parent and all its subsidiaries."). Accordingly, any intra-entity profit or loss on assets remaining within the consolidated group shall be eliminated; the concept usually applied for this purpose is gross profit or loss (see also paragraph [810-10-45-8](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-8)). ##### [810-10-45-2](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:05.202Z to 2026-09-10T01:29:05.202Z Record version: sha256:57c5797c28c90f649ebc0e55fa0a94c0695832d1de5c75748d58134f2a144e3e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The retained earnings or deficit of a [subsidiary](https://asc.understandingaccounting.org/glossary/s/#subsidiary "An entity, including an unincorporated entity such as a partnership or trust, in which another entity, known as its parent, holds a controlling financial interest. (Also, a variable interest entity that is consolidated by a primary beneficiary.)") at the date of acquisition by the [parent](https://asc.understandingaccounting.org/glossary/p/#parent "An entity that has a controlling financial interest in one or more subsidiaries. (Also, an entity that is the primary beneficiary of a variable interest entity.)") shall not be included in consolidated retained earnings. ##### [810-10-45-3](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:05.202Z to 2026-09-10T01:29:05.202Z Record version: sha256:b083305910d561d0679a7a62753dc16f9e94ad012e5641b5c158316810754955 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [810-10-45-4](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:05.202Z to 2026-09-10T01:29:05.202Z Record version: sha256:3cf694595605cee38a31d552446a7315314699d32bdb5fd09d3cb38c2e036709 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When a subsidiary is initially consolidated during the year, the consolidated financial statements shall include the subsidiary's revenues, expenses, gains, and losses only from the date the subsidiary is initially consolidated. ##### [810-10-45-5](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:05.202Z to 2026-09-10T01:29:05.202Z Record version: sha256:b52680c4a3c8e9eda668a2da51d655171ced2a50ffbc5f6d78312159f4bb9dd3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Shares of the parent held by a subsidiary shall not be treated as outstanding shares in the consolidated statement of financial position and, therefore, shall be eliminated in the consolidated financial statements and reflected as treasury shares. ##### [810-10-45-6](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:05.202Z to 2026-09-10T01:29:05.202Z Record version: sha256:18ab13246094270165e2715fbfb15aedd12213e0c8a4e94ef4386dee3278706e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [810-10-45-7](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:05.202Z to 2026-09-10T01:29:05.202Z Record version: sha256:e1af1ac6eadd7f87d9f5c97d4159add7879ec38c8ceb00fa83e638db73718dd3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [810-10-45-8](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:05.202Z to 2026-09-10T01:29:05.202Z Record version: sha256:82aa792f527926932c2352e26c8c1732f3f4fb27431e28e65e433c99ee8794f3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If income taxes have been paid on intra-entity profits on [inventory](https://asc.understandingaccounting.org/glossary/i/#inventory "The aggregate of those items of tangible personal property that have any of the following characteristics: Held for sale in the ordinary course of business In process of production for such sale To be currently consumed in the production of goods or services to be available for sale. The term inventory embraces goods awaiting sale (the merchandise of a trading concern and the finished goods of a manufacturer), goods in the course of production (work in process), and goods to be consumed directly or indirectly in production (raw materials and supplies). This definition of inventories excludes long-term assets subject to depreciation accounting, or goods which, when put into use, will be so classified. The fact that a depreciable asset is retired from regular use and held for sale does not indicate that the item should be classified as part of the inventory. Raw materials and supplies purchased for production may be used or consumed for the construction of long-term assets or other purposes not related to production, but the fact that inventory items representing a small portion of the total may not be absorbed ultimately in the production process does not require separate classification. By trade practice, operating materials and supplies of certain types of entities such as oil producers are usually treated as inventory.") remaining within the consolidated group, those taxes shall be deferred or the intra-entity profits to be eliminated in consolidation shall be appropriately reduced. ##### [810-10-45-9](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:05.202Z to 2026-09-10T01:29:05.202Z Record version: sha256:869a966f9e0a88248eff361c0f92605efa79af587064856f250d61f51cd3e1d5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Occasionally, subsidiaries capitalize retained earnings arising since acquisition, by means of a stock dividend or otherwise. This does not require a transfer to retained earnings on consolidation because the retained earnings in the consolidated financial statements shall reflect the accumulated earnings of the consolidated group not distributed to the [owners](https://asc.understandingaccounting.org/glossary/o/#owners "Used broadly to include holders of ownership interests (equity interests) of investor-owned entities, mutual entities, or not-for-profit entities. Owners include shareholders, partners, proprietors, or members or participants of mutual entities. Owners also include owner and member interests in the net assets of not-for-profit entities.") of, or capitalized by, the parent. #### Combined Financial Statements ##### [810-10-45-10](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:05.202Z to 2026-09-10T01:29:05.202Z Record version: sha256:09a815ef6e1251a2a2f33e811f937767875dfe75dae563c355c83408fef331c8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If [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.") are prepared for a group of related entities, such as a group of commonly controlled entities, intra-entity transactions and profits or losses shall be eliminated, and [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."), foreign operations, different fiscal periods, or income taxes shall be treated in the same manner as in consolidated financial statements. #### Parent-Entity Financial Statements ##### [810-10-45-11](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:05.202Z to 2026-09-10T01:29:05.202Z Record version: sha256:a5aec57ec2d50dac84eca0d8a0146133fe7120b65a72011eaa7d9e6ef53181af Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In some cases parent-entity financial statements may be needed, in addition to consolidated financial statements, to indicate adequately the position of bondholders and other creditors or preferred shareholders of the parent. Consolidating financial statements, in which one column is used for the parent and other columns for particular subsidiaries or groups of subsidiaries, often are an effective means of presenting the pertinent information. However, consolidated financial statements are the general-purpose financial statements of a parent having one or more subsidiaries; thus, parent-entity financial statements are not a valid substitute for consolidated financial statements. #### Differing Fiscal Year-Ends Between Parent and Subsidiary ##### [810-10-45-12](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:05.202Z to 2026-09-10T01:29:05.202Z Record version: sha256:b9f52b40038d585644fdcaa52543e9c8d45f040c8307eb9d5294a65d16921dd2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. It ordinarily is feasible for the subsidiary to prepare, for consolidation purposes, financial statements for a period that corresponds with or closely approaches the fiscal period of the parent. However, if the difference is not more than about three months, it usually is acceptable to use, for consolidation purposes, the subsidiary's financial statements for its fiscal period; if this is done, recognition should be given by disclosure or otherwise to the effect of intervening events that materially affect the financial position or results of operations. #### A Change in the Fiscal Year-End Lag Between Subsidiary and Parent ##### [810-10-45-13](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:05.202Z to 2026-09-10T01:29:05.202Z Record version: sha256:e36d6b4e8582da91d5eb3d3516f70c556b2f464712c06df5b13169be06575ea5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A parent or an investor should report a change to (or the elimination of) a previously existing difference between the parent's reporting period and the reporting period of a consolidated entity or between the reporting period of an investor and the reporting period of an equity method investee in the parent's or investor's consolidated financial statements as a change in accounting principle in accordance with the provisions of Topic 250. While that Topic generally requires voluntary changes in accounting principles to be reported retrospectively, retrospective application is not required if it is impracticable to apply the effects of the change pursuant to paragraphs [250-10-45-9 through 45-10](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-9) . The change or elimination of a lag period represents a change in accounting principle as defined in Topic 250. The scope of this paragraph applies to all entities that change (or eliminate) a previously existing difference between the reporting periods of a parent and a consolidated entity or an investor and an equity method investee. That change may include a change in or the elimination of the previously existing difference (lag period) due to the parent's or investor's ability to obtain financial results from a reporting period that is more consistent with, or the same as, that of the parent or investor. This paragraph does not apply in situations in which a parent entity or an investor changes its fiscal year-end. #### Proportionate Consolidation ##### [810-10-45-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:05.202Z to 2026-09-10T01:29:05.202Z Record version: sha256:43417738eac90df208f77b0651794ba91168cfa4f58696c3c768eea1be1b76db Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the investor-venturer owns an undivided interest in each asset and is proportionately liable for its share of each liability, the provisions of paragraph [323-10-45-1](https://asc.understandingaccounting.org/asc/323/10/#323-10-45-1) may not apply in some industries. For example, in certain industries the investor-venturer may account in its financial statements for its pro rata share of the assets, liabilities, revenues, and expenses of the venture. Specifically, a proportionate gross financial statement presentation is not appropriate for an investment in an unincorporated legal entity accounted for by the equity method of accounting unless the investee is in either the construction industry (see paragraph [910-810-45-1](https://asc.understandingaccounting.org/asc/810/910/#810-910-45-1)) or an extractive industry (see paragraphs [930-810-45-1](https://asc.understandingaccounting.org/asc/810/930/#810-930-45-1) and [932-810-45-1](https://asc.understandingaccounting.org/asc/810/932/#810-932-45-1)). An entity is in an extractive industry only if its activities are limited to the extraction of mineral resources (such as oil and gas exploration and production) and not if its activities involve related activities such as refining, marketing, or transporting extracted mineral resources. #### Noncontrolling Interest in a Subsidiary ##### [810-10-45-15](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:05.202Z to 2026-09-10T01:29:05.202Z Record version: sha256:257a7987e1b78cc6047f15b58acf6d4ef40e35bdd8e5d5a6befa6cce0ef23058 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The ownership interests in the subsidiary that are held by owners other than the parent is a noncontrolling interest. The noncontrolling interest in a subsidiary is part of the equity of the consolidated group. ##### [810-10-45-16](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:05.202Z to 2026-09-10T01:29:05.202Z Record version: sha256:87b702fd7c8ed185990f43963706e425afb7fe3323a9d92daab6561a72a7abc9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The noncontrolling interest shall be reported in the consolidated statement of financial position within equity (net assets), separately from the parent's equity (or net assets). That amount shall be clearly identified and labeled, for example, as noncontrolling interest in subsidiaries (see paragraph [810-10-55-4I](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4I)). An entity with noncontrolling interests in more than one subsidiary may present those interests in aggregate in the consolidated financial statements. 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.") shall report the effects of any donor-imposed restrictions, if any, in accordance with paragraph [958-810-45-1](https://asc.understandingaccounting.org/asc/810/958/#810-958-45-1). ##### [810-10-45-16A](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-16A) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:05.202Z to 2026-09-10T01:29:05.202Z Record version: sha256:a5bcbb86a30c5d1bf6fad1035a161cf9d9096a855c7d083fca77d9c3ff144055 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Only either of the following can be a noncontrolling interest in the consolidated financial statements: 1. a A financial instrument (or an embedded feature) issued by a subsidiary that is classified as equity in the subsidiary's financial statements 2. b A financial instrument (or an embedded feature) issued by a parent or a subsidiary for which the payoff to the counterparty is based, in whole or in part, on the stock of a consolidated subsidiary, that is considered indexed to the entity's own stock in the consolidated financial statements of the parent and that is classified as equity. ##### [810-10-45-17](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:05.202Z to 2026-09-10T01:29:05.202Z Record version: sha256:6869e9647054f5323e340fa556704f2ed586260581d77e229c7f8dea7a167576 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A financial instrument issued by a subsidiary that is classified as a liability in the subsidiary's financial statements based on the guidance in other Subtopics is not a noncontrolling interest because it is not an ownership interest. For example, Topic 480 provides guidance for classifying certain financial instruments issued by a subsidiary. ##### [810-10-45-17A](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-17A) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:05.202Z to 2026-09-10T01:29:05.202Z Record version: sha256:fe08833c9baf517945dd9263467b5fbbe2c75a3d5334ace482be8b37178eb415 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An equity-classified instrument (including an embedded feature that is separately recorded in equity under applicable GAAP) within the scope of the guidance in paragraph [815-40-15-5C](https://asc.understandingaccounting.org/asc/815/40/#815-40-15-5C) shall be presented as a component of noncontrolling interest in the consolidated financial statements whether the instrument was entered into by the parent or the subsidiary. However, if such an equity-classified instrument was entered into by the parent and expires unexercised, the carrying amount of the instrument shall be reclassified from the noncontrolling interest to the controlling interest. #### Attributing Net Income and Comprehensive Income to the Parent and the Noncontrolling Interest ##### [810-10-45-18](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:05.202Z to 2026-09-10T01:29:05.202Z Record version: sha256:3596d741fa062374b2cbbb5e6fbb42a4c9c7b357d82f57cd048e9c093c88a53d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amount of intra-entity income or loss to be eliminated in accordance with paragraph [810-10-45-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-1) is not affected by the existence of a noncontrolling interest. The complete elimination of the intra-entity income or loss is consistent with the underlying assumption that consolidated financial statements represent the financial position and operating results of a single economic entity. The elimination of the intra-entity income or loss may be allocated between the parent and noncontrolling interests. ##### [810-10-45-19](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:05.202Z to 2026-09-10T01:29:05.202Z Record version: sha256:cffae77b48cbef68db3a961a7888bd8209798d892455a1bd5413d49ea0622252 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Revenues, expenses, gains, losses, net income or loss, and other comprehensive income shall be reported in the consolidated financial statements at the consolidated amounts, which include the amounts attributable to the owners of the parent and the noncontrolling interest. ##### [810-10-45-20](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-20) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:05.202Z to 2026-09-10T01:29:05.202Z Record version: sha256:15b549f26835b11d0c67227cd66b3db381491310b78b1ec83390a369b13e862c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Net income or loss and comprehensive income or loss, as described in Topic 220, shall be attributed to the parent and the noncontrolling interest. ##### [810-10-45-21](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-21) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:05.202Z to 2026-09-10T01:29:05.202Z Record version: sha256:d2bfc164521284fe6154c9c1df1eac9c0f9e12eee4e2267fdaa215e9f946ee2a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Losses attributable to the parent and the noncontrolling interest in a subsidiary may exceed their interests in the subsidiary's equity. The excess, and any further losses attributable to the parent and the noncontrolling interest, shall be attributed to those interests. That is, the noncontrolling interest shall continue to be attributed its share of losses even if that attribution results in a deficit noncontrolling interest balance. #### Changes in a Parent's Ownership Interest in a Subsidiary ##### [810-10-45-21A](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-21A) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:05.202Z to 2026-09-10T01:29:05.202Z Record version: sha256:edf4888ae233997d440ca343635ef3497ea677a3323be8a70fa2ac71cf7ead71 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in paragraphs [810-10-45-22 through 45-24](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-22) applies to the following: 1. a Transactions that result in an increase in ownership of a subsidiary 2. b Transactions that result in a decrease in ownership of either of the following while the parent retains a controlling financial interest in the subsidiary: 1. 1 A subsidiary that is a business or a [nonprofit activity](https://asc.understandingaccounting.org/glossary/n/#nonprofit-activity "An integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing benefits, other than goods or services at a profit or profit equivalent, as a fulfillment of an entity's purpose or mission (for example, goods or services to beneficiaries, customers, or members). As with a not-for-profit entity, a nonprofit activity possesses characteristics that distinguish it from a business or a for-profit business entity."), except for either of the following: 1. i [Subparagraph superseded by Accounting Standards Update No. 2017-05](https://asc.understandingaccounting.org/updates/asu-2017-05/). 2. ii A conveyance of oil and gas mineral rights (for guidance on conveyances of oil and gas mineral rights and related transactions, see Subtopic 932-360). 3. iii A transfer of a good or service in a contract with a customer within the scope of Topic 606. 2. 2 A subsidiary that is not a business or a nonprofit activity if the substance of the transaction is not addressed directly by guidance in other Topics that include, but are not limited to, all of the following: 1. i Topic 606 on revenue from contracts with customers 2. ii Topic 845 on exchanges of nonmonetary assets 3. iii Topic 860 on transferring and servicing financial assets 4. iv Topic 932 on conveyances of mineral rights and related transactions 5. v Subtopic 610-20 on gains and losses from the derecognition of nonfinancial assets. ##### [810-10-45-22](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-22) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:05.202Z to 2026-09-10T01:29:05.202Z Record version: sha256:9908f3ee7eaa5fbdf7e50d6bb93ac4d7bc0b2470695f8b9b48968b462371a6cb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A parent's ownership interest in a subsidiary might change while the parent retains its controlling financial interest in the subsidiary. For example, a parent's ownership interest in a subsidiary might change if any of the following occur: 1. a The parent purchases additional ownership interests in its subsidiary. 2. b The parent sells some of its ownership interests in its subsidiary. 3. c The subsidiary reacquires some of its ownership interests. 4. d The subsidiary issues additional ownership interests. ##### [810-10-45-23](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-23) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:05.202Z to 2026-09-10T01:29:05.202Z Record version: sha256:b4b954b2b2669021a3875dd5cae6db7491b546ccaa9fb0b003865238a09c008a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Changes in a parent's ownership interest while the parent retains its controlling financial interest in its subsidiary shall be accounted for as equity transactions (investments by owners and distributions to owners acting in their capacity as owners). Therefore, no gain or loss shall be recognized in consolidated net income or comprehensive income. The carrying amount of the noncontrolling interest shall be adjusted to reflect the change in its ownership interest in the subsidiary. Any difference between the fair value of the consideration received or paid and the amount by which the noncontrolling interest is adjusted shall be recognized in equity attributable to the parent. Example 1 (paragraph [810-10-55-4B](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4B)) illustrates the application of this guidance. ##### [810-10-45-24](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-24) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:05.202Z to 2026-09-10T01:29:05.202Z Record version: sha256:7a8bc1c29749c8915779a0e71ad9d0c8ae7aecdfea00f0ebe09b050cf79a4007 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A change in a parent's ownership interest might occur in a subsidiary that has accumulated other comprehensive income. If that is the case, the carrying amount of accumulated other comprehensive income shall be adjusted to reflect the change in the ownership interest in the subsidiary through a corresponding charge or credit to equity attributable to the parent. Example 1, Case C (paragraph [810-10-55-4F](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4F)) illustrates the application of this guidance. ### Variable Interest Entities ##### [810-10-45-25](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-25) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:05.202Z to 2026-09-10T01:29:05.202Z Record version: sha256:db9f7c49fa283e49f9c00f6b5178f5d02b89ffcfa6e7f5be0e94265990e5565f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A reporting entity shall present each of the following separately on the face of the statement of financial position: 1. a Assets of a consolidated [variable interest entity](https://asc.understandingaccounting.org/glossary/v/#variable-interest-entity "A legal entity subject to consolidation according to the provisions of the Variable Interest Entities Subsections of Subtopic 810-10.") (VIE) that can be used only to settle obligations of the consolidated VIE 2. b Liabilities of a consolidated VIE for which creditors (or beneficial interest holders) do not have recourse to the general credit of the primary beneficiary. Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:861b8b4cf92616d3d0efb1b9f34b1a68fc63b5dad2bbd338e527b537933c4d91 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-10-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/810/10/#50-disclosure) SEC content: no #### Consolidation Policy ##### [810-10-50-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:1da060412e77e7a932d0cedf20fda939f8af408e19ea5b0bf0e0ccf80507599e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Consolidated financial statements](https://asc.understandingaccounting.org/glossary/c/#consolidated-financial-statements "The financial statements of a consolidated group of entities that include a parent and all its subsidiaries presented as those of a single economic entity.") shall disclose the consolidation policy that is being followed. In most cases this can be made apparent by the headings or other information in the financial statements, but in other cases a note to financial statements is required. #### Parent with a Less-Than-Wholly-Owned Subsidiary ##### [810-10-50-1A](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-1A) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:3a537e6d798494515da06af4cc199864ba9f8a295074922ad96e01a7232deecf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [parent](https://asc.understandingaccounting.org/glossary/p/#parent "An entity that has a controlling financial interest in one or more subsidiaries. (Also, an entity that is the primary beneficiary of a variable interest entity.)") with one or more less-than-wholly-owned [subsidiaries](https://asc.understandingaccounting.org/glossary/s/#subsidiary "An entity, including an unincorporated entity such as a partnership or trust, in which another entity, known as its parent, holds a controlling financial interest. (Also, a variable interest entity that is consolidated by a primary beneficiary.)") shall disclose all of the following for each reporting period: 1. a Separately, on the face of the consolidated financial statements, both of the following: 1. 1 The amounts of consolidated net income and consolidated comprehensive income 2. 2 The related amounts of each attributable to the parent and the [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."). 2. b Either in the notes or on the face of the consolidated income statement, amounts attributable to the parent for any of the following, if reported in the consolidated financial statements: 1. 1 Income from continuing operations 2. 2 Discontinued operations 3. 3 [Subparagraph superseded by Accounting Standards Update No. 2015-01](https://asc.understandingaccounting.org/updates/asu-2015-01/). 3. c Either in the consolidated statement of changes in equity, if presented, or in the notes to consolidated financial statements, a reconciliation at the beginning and the end of the period of the carrying amount of total equity (net assets), equity (net assets) attributable to the parent, and equity (net assets) attributable to the noncontrolling interest. That reconciliation shall separately disclose all of the following: 1. 1 Net income 2. 2 Transactions with owners acting in their capacity as owners, showing separately contributions from and distributions to owners 3. 3 Each component of other comprehensive income. 4. d In notes to the consolidated financial statements, a separate schedule that shows the effects of any changes in a parent's ownership interest in a subsidiary on the equity attributable to the parent. Example 2 (see paragraph [810-10-55-4G](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4G)) illustrates the application of the guidance in this paragraph. #### Deconsolidation of a Subsidiary ##### [810-10-50-1B](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-1B) Pending content: yes Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:84a8aec0ee0c97a78ba3a7c68f67bce221873ab32978f22de6dca3823b3e9114 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In the period that either a subsidiary is deconsolidated or a group of assets is derecognized in accordance with paragraph [810-10-40-3A](https://asc.understandingaccounting.org/asc/810/10/#810-10-40-3A), the parent shall disclose all of the following: 1. a The amount of any gain or loss recognized in accordance with paragraph [810-10-40-5](https://asc.understandingaccounting.org/asc/810/10/#810-10-40-5) 2. b The portion of any gain or loss related to the remeasurement of any retained investment in the former subsidiary or group of assets to its fair value 3. c The caption in the income statement in which the gain or loss is recognized unless separately presented on the face of the income statement 4. d A description of the valuation technique(s) used to measure the fair value of any direct or indirect retained investment in the former subsidiary or group of assets 5. e Information that enables users of the parent's financial statements to assess the inputs used to develop the fair value in item (d) 6. f The nature of continuing involvement with the subsidiary or entity acquiring the group of assets after it has been deconsolidated or derecognized 7. g Whether the transaction that resulted in the deconsolidation or derecognition was with a related party 8. h Whether the former subsidiary or entity acquiring a group of assets will be a related party after deconsolidation. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)In the period that either a subsidiary is deconsolidated or a group of assets is derecognized in accordance with paragraph [810-10-40-3A](https://asc.understandingaccounting.org/asc/810/10/#810-10-40-3A), the parent shall disclose all of the following: 1. a The amount of any gain or loss recognized in accordance with paragraph [810-10-40-5](https://asc.understandingaccounting.org/asc/810/10/#810-10-40-5) 2. b The portion of any gain or loss related to the remeasurement of any retained investment in the former subsidiary or group of assets to its fair value 3. c The caption in the income statement in which the gain or loss is recognized unless separately presented on the face of the income statement 4. d A description of the valuation technique(s) used to measure the fair value of any direct or indirect retained investment in the former subsidiary or group of assets 5. e Information that enables users of the parent's financial statements to assess the inputs used to develop the fair value in item (d) 6. f The nature of continuing involvement with the subsidiary or entity acquiring the group of assets after it has been deconsolidated or derecognized 7. g Whether the transaction that resulted in the deconsolidation or derecognition was with a related party 8. h Whether the former subsidiary or entity acquiring a group of assets will be a related party after deconsolidation. See paragraphs [220-40-50-21 through 50-25](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-21) for additional disclosure requirements. #### A Change in the Difference Between Parent and Subsidiary Fiscal Year-Ends ##### [810-10-50-2](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:1500c7d27c7401fc4ad2e7aaaf2c2d7169785f76598f4b79ff9f96562a2b0e4c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity should make the disclosures required pursuant to Topic 250. This paragraph applies to all entities that change (or eliminate) a previously existing difference between the reporting periods of a parent and a consolidated entity or an investor and an equity method investee. This paragraph does not apply in situations in which a parent entity or an investor changes its fiscal year-end. ### Variable Interest Entities ##### [810-10-50-2A](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-2A) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:241a6c481f57a8f30411d37d71a0460bc9f712700d3d8cdb9a4e3ce9d08b234f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). ##### [810-10-50-2AA](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-2AA) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:acb5ea2dfda13a73e1cd630dec15dd10441b74083e22efa84b5f092ff3c085d4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The principal objectives of this Subsection's required disclosures are to provide financial statement users with an understanding of all of the following: 1. a The significant judgments and assumptions made by a reporting entity in determining whether it must do any of the following: 1. 1 Consolidate a [variable interest entity](https://asc.understandingaccounting.org/glossary/v/#variable-interest-entity "A legal entity subject to consolidation according to the provisions of the Variable Interest Entities Subsections of Subtopic 810-10.") (VIE) 2. 2 Disclose information about its involvement in a VIE. 2. b The nature of restrictions on a consolidated VIE's assets and on the settlement of its liabilities reported by a reporting entity in its statement of financial position, including the carrying amounts of such assets and liabilities. 3. c The nature of, and changes in, the risks associated with a reporting entity's involvement with the VIE. 4. d How a reporting entity's involvement with the VIE affects the reporting entity's financial position, financial performance, and cash flows. ##### [810-10-50-2AB](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-2AB) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:bf7f4d522bac0ede85c0f60c565f644e7c0f4da06ca7905c60f3579250a2513a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A reporting entity shall consider the overall objectives in the preceding paragraph in providing the disclosures required by this Subsection. To achieve those objectives, a reporting entity may need to supplement the disclosures otherwise required by this Subsection, depending on the facts and circumstances surrounding the VIE and a reporting entity's interest in that VIE. ##### [810-10-50-2AC](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-2AC) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:440c3e0074e9445c78e2f53a400f96274e6d742f537731006551ba803030d293 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The disclosures required by this Subsection may be provided in more than one note to the financial statements, as long as the objectives in paragraph [810-10-50-2AA](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-2AA) are met. If the disclosures are provided in more than one note to the financial statements, the reporting entity shall provide a cross reference to the other notes to the financial statements that provide the disclosures prescribed in this Subsection for similar entities. ##### [810-10-50-2AD](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-2AD) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:0a3448a097e18f645067f6992ba057166e61c0a11764881bcc149f827180d58a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-17](https://asc.understandingaccounting.org/updates/asu-2018-17/) ##### [810-10-50-2AE](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-2AE) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:5670fc1360da3ca456ef828445e51975939d10f23d3920b412b891d172c168ad Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-17](https://asc.understandingaccounting.org/updates/asu-2018-17/). ##### [810-10-50-2AF](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-2AF) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:0b3d63b3a5ee572967999ae50d324b7a473745e0eee14b9ef41bb69708247d65 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-17](https://asc.understandingaccounting.org/updates/asu-2018-17/) #### Accounting Alternative for Entities under Common Control ##### [810-10-50-2AG](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-2AG) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:da8c9782e7178bbc5e1cf3c2c204b5139861f862821b74b32149832c090550ab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A reporting entity that neither consolidates nor applies the requirements of the Variable Interest Entities Subsections to a [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.") under common control because it meets the criteria in paragraph [810-10-15-17AD](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17AD) shall disclose the following: 1. a The nature and risks associated with a reporting entity's involvement with the legal entity under common control. 2. b How a reporting entity's involvement with the legal entity under common control affects the reporting entity's financial position, financial performance, and cash flows. 3. c The carrying amounts and classification of the assets and liabilities in the reporting entity's statement of financial position resulting from its involvement with the legal entity under common control. 4. d The reporting entity's maximum exposure to loss resulting from its involvement with the legal entity under common control. If the reporting entity's maximum exposure to loss resulting from its involvement with the legal entity under common control cannot be quantified, that fact shall be disclosed. 5. e If the reporting entity's maximum exposure to loss (as required by (d)) exceeds the carrying amount of the assets and liabilities as described in (c), qualitative and quantitative information to allow users of financial statements to understand the excess exposure. That information shall include, but is not limited to, the terms of the arrangements, considering both explicit and implicit arrangements, that could require the reporting entity to provide financial support (for example, implicit guarantee to fund losses) to the legal entity under common control, including events or circumstances that could expose the reporting entity to a loss. ##### [810-10-50-2AH](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-2AH) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:b078383a9d519f583cf4aaeb5cef52ff41fe6b062df56165822161b8c3b5e723 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In applying the disclosure guidance in paragraph [810-10-50-2AG(d) through (e)](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-2AG), a reporting entity under common control shall consider exposures through implicit guarantees. Determining whether an implicit guarantee exists is based on facts and circumstances. Those facts and circumstances include, but are not limited to, whether: 1. a The [private company](https://asc.understandingaccounting.org/glossary/p/#private-company "An entity other than a public business entity, a not-for-profit entity, or an employee benefit plan within the scope of Topics 960 through 965 on plan accounting.") (reporting entity) has an economic incentive to act as a guarantor or to make funds available. 2. b The private company (reporting entity) has acted as a guarantor for or made funds available to the legal entity in the past. ##### [810-10-50-2AI](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-2AI) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:967555da27fa1de4386bbdecbdfc618c4900ebe7bd20dd3365f895ba0a323cd0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In disclosing information about the legal entity under common control, a private company (reporting entity) shall present these disclosures in addition to the disclosures required by other guidance (for example, in Topics 460 on guarantees, Topic 850 on related party disclosures, and Topic 842 on [leases](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.")). Those disclosures could be combined in a single note or by including cross-references within the notes to financial statements. #### Primary Beneficiary of a VIE ##### [810-10-50-3](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-3) Pending content: yes Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:df28f60535672e718c21767d0430ba8f30d0228044630bb85d6c61bd329950a7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The [primary beneficiary](https://asc.understandingaccounting.org/glossary/p/#primary-beneficiary "An entity that consolidates a variable interest entity (VIE). See paragraphs 810-10-25-38 through 25-38J for guidance on determining the primary beneficiary.") of a VIE that is a [business](https://asc.understandingaccounting.org/glossary/b/#business "Paragraphs 805-10-55-3A805-10-55-4805-10-55-5805-10-55-6 and 805-10-55-8805-10-55-9 define what is considered a business.") shall provide the disclosures required by other guidance. The primary beneficiary of a VIE that is not a business shall disclose the amount of gain or loss recognized on the initial consolidation of the VIE.In addition to disclosures required elsewhere in this Topic, the primary beneficiary of a VIE shall disclose all of the following: 1. a [Subparagraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). 2. b [Subparagraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). 3. bb The carrying amounts and classification of the VIE's assets and liabilities in the statement of financial position that are consolidated in accordance with the Variable Interest Entities Subsections, including qualitative information about the relationship(s) between those assets and liabilities. For example, if the VIE's assets can be used only to settle obligations of the VIE, the reporting entity shall disclose qualitative information about the nature of the restrictions on those assets. 4. c Lack of recourse if creditors (or beneficial interest holders) of a consolidated VIE have no recourse to the general credit of the primary beneficiary 5. d Terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests that could require the reporting entity to provide financial support (for example, liquidity arrangements and obligations to purchase assets) to the VIE, including events or circumstances that could expose the reporting entity to a loss. A VIE may issue voting equity interests, and the entity that holds a majority voting interest also may be the primary beneficiary of the VIE. If so, and if the VIE meets the definition of a business and the VIE's assets can be used for purposes other than the settlement of the VIE's obligations, the disclosures in paragraph [810-10-50-3(bb) through (d)](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-3) are not required. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)The [primary beneficiary](https://asc.understandingaccounting.org/glossary/p/#primary-beneficiary "An entity that consolidates a variable interest entity (VIE). See paragraphs 810-10-25-38 through 25-38J for guidance on determining the primary beneficiary.") of a VIE that is a [business](https://asc.understandingaccounting.org/glossary/b/#business "Paragraphs 805-10-55-3A805-10-55-4805-10-55-5805-10-55-6 and 805-10-55-8805-10-55-9 define what is considered a business.") shall provide the disclosures required by other guidance. The primary beneficiary of a VIE that is not a business shall disclose the amount of gain or loss recognized on the initial consolidation of the VIE.In addition to disclosures required elsewhere in this Topic, the primary beneficiary of a VIE shall disclose all of the following: 1. a [Subparagraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). 2. b [Subparagraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). 3. bb The carrying amounts and classification of the VIE's assets and liabilities in the statement of financial position that are consolidated in accordance with the Variable Interest Entities Subsections, including qualitative information about the relationship(s) between those assets and liabilities. For example, if the VIE's assets can be used only to settle obligations of the VIE, the reporting entity shall disclose qualitative information about the nature of the restrictions on those assets. 4. c Lack of recourse if creditors (or beneficial interest holders) of a consolidated VIE have no recourse to the general credit of the primary beneficiary 5. d Terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests that could require the reporting entity to provide financial support (for example, liquidity arrangements and obligations to purchase assets) to the VIE, including events or circumstances that could expose the reporting entity to a loss. A VIE may issue voting equity interests, and the entity that holds a majority voting interest also may be the primary beneficiary of the VIE. If so, and if the VIE meets the definition of a business and the VIE's assets can be used for purposes other than the settlement of the VIE's obligations, the disclosures in paragraph [810-10-50-3(bb) through (d)](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-3) are not required. See paragraphs [220-40-50-21 through 50-25](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-21) for additional disclosure requirements. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)The [primary beneficiary](https://asc.understandingaccounting.org/glossary/p/#primary-beneficiary "An entity that consolidates a variable interest entity (VIE). See paragraphs 810-10-25-38 through 25-38J for guidance on determining the primary beneficiary.") of a VIE that is a [business](https://asc.understandingaccounting.org/glossary/b/#business "Paragraphs 805-10-55-3A805-10-55-4805-10-55-5805-10-55-6 and 805-10-55-8805-10-55-9 define what is considered a business.") shall provide the disclosures required by other guidance. The primary beneficiary of a VIE that is not a business shall disclose the amount of gain or loss recognized on the initial consolidation of the VIE.In addition to disclosures required elsewhere in this Topic, the primary beneficiary of a VIE shall disclose all of the following in interim and annual reporting periods: 1. a [Subparagraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). 2. b [Subparagraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). 3. bb The carrying amounts and classification of the VIE's assets and liabilities in the statement of financial position that are consolidated in accordance with the Variable Interest Entities Subsections, including qualitative information about the relationship(s) between those assets and liabilities. For example, if the VIE's assets can be used only to settle obligations of the VIE, the reporting entity shall disclose qualitative information about the nature of the restrictions on those assets. 4. c Lack of recourse if creditors (or beneficial interest holders) of a consolidated VIE have no recourse to the general credit of the primary beneficiary 5. d Terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests that could require the reporting entity to provide financial support (for example, liquidity arrangements and obligations to purchase assets) to the VIE, including events or circumstances that could expose the reporting entity to a loss. A VIE may issue voting equity interests, and the entity that holds a majority voting interest also may be the primary beneficiary of the VIE. If so, and if the VIE meets the definition of a business and the VIE's assets can be used for purposes other than the settlement of the VIE's obligations, the disclosures in paragraph [810-10-50-3(bb) through (d)](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-3) are not required. See paragraphs [220-40-50-21 through 50-25](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-21) for additional disclosure requirements. #### Nonprimary Beneficiary Holder of a Variable Interest in a VIE ##### [810-10-50-4](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-4) Pending content: yes Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:f2ccb06bbc7d1825944bd62d19acdbd6935323c359574b3146a45eb4bff89391 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In addition to disclosures required by other guidance, a reporting entity that holds a variable interest in a VIE, but is not the VIE's primary beneficiary, shall disclose: 1. a The carrying amounts and classification of the assets and liabilities in the reporting entity's statement of financial position that relate to the reporting entity's variable interest in the VIE. 2. b The reporting entity's maximum exposure to loss as a result of its involvement with the VIE, including how the maximum exposure is determined and the significant sources of the reporting entity's exposure to the VIE. If the reporting entity's maximum exposure to loss as a result of its involvement with the VIE cannot be quantified, that fact shall be disclosed. 3. c A tabular comparison of the carrying amounts of the assets and liabilities, as required by (a) above, and the reporting entity's maximum exposure to loss, as required by (b) above. A reporting entity shall provide qualitative and quantitative information to allow financial statement users to understand the differences between the two amounts. That discussion shall include, but is not limited to, the terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests, that could require the reporting entity to provide financial support (for example, liquidity arrangements and obligations to purchase assets) to the VIE, including events or circumstances that could expose the reporting entity to a loss. 4. d Information about any liquidity arrangements, guarantees, and/or other commitments by third parties that may affect the fair value or risk of the reporting entity's variable interest in the VIE is encouraged. 5. e If applicable, significant factors considered and judgments made in determining that the power to direct the activities of a VIE that most significantly impact the VIE's economic performance is shared in accordance with the guidance in paragraph [810-10-25-38D](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38D). Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)In addition to disclosures required by other guidance, in interim and annual reporting periods, a reporting entity that holds a variable interest in a VIE, but is not the VIE's primary beneficiary, shall disclose: 1. a The carrying amounts and classification of the assets and liabilities in the reporting entity's statement of financial position that relate to the reporting entity's variable interest in the VIE. 2. b The reporting entity's maximum exposure to loss as a result of its involvement with the VIE, including how the maximum exposure is determined and the significant sources of the reporting entity's exposure to the VIE. If the reporting entity's maximum exposure to loss as a result of its involvement with the VIE cannot be quantified, that fact shall be disclosed. 3. c A tabular comparison of the carrying amounts of the assets and liabilities, as required by (a) above, and the reporting entity's maximum exposure to loss, as required by (b) above. A reporting entity shall provide qualitative and quantitative information to allow financial statement users to understand the differences between the two amounts. That discussion shall include, but is not limited to, the terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests, that could require the reporting entity to provide financial support (for example, liquidity arrangements and obligations to purchase assets) to the VIE, including events or circumstances that could expose the reporting entity to a loss. 4. d Information about any liquidity arrangements, guarantees, and/or other commitments by third parties that may affect the fair value or risk of the reporting entity's variable interest in the VIE is encouraged. 5. e If applicable, significant factors considered and judgments made in determining that the power to direct the activities of a VIE that most significantly impact the VIE's economic performance is shared in accordance with the guidance in paragraph [810-10-25-38D](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38D). #### Relation to Topic 860 Disclosures ##### [810-10-50-5](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:c12ffc18aec0d20f9f729618e45a638832d083be52b93c4fd3abd7acc50db07e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). #### Primary Beneficiaries or Other Holders of Interests in VIEs ##### [810-10-50-5A](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-5A) Pending content: yes Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:15ff9544f56cd3d39f75894e60c5129012a5fe435013d19f37c32bf50d0b4631 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A reporting entity that is a primary beneficiary of a VIE or a reporting entity that holds a variable interest in a VIE but is not the entity's primary beneficiary shall disclose all of the following: 1. a Its methodology for determining whether the reporting entity is the primary beneficiary of a VIE, including, but not limited to, significant judgments and assumptions made. One way to meet this disclosure requirement would be to provide information about the types of involvements a reporting entity considers significant, supplemented with information about how the significant involvements were considered in determining whether the reporting entity is the primary beneficiary. 2. b If facts and circumstances change such that the conclusion to consolidate a VIE has changed in the most recent financial statements (for example, the VIE was previously consolidated and is not currently consolidated), the primary factors that caused the change and the effect on the reporting entity's financial statements. 3. c Whether the reporting entity has provided financial or other support (explicitly or implicitly) during the periods presented to the VIE that it was not previously contractually required to provide or whether the reporting entity intends to provide that support, including both of the following: 1. 1 The type and amount of support, including situations in which the reporting entity assisted the VIE in obtaining another type of support 2. 2 The primary reasons for providing the support. 4. d Qualitative and quantitative information about the reporting entity's involvement (giving consideration to both explicit arrangements and implicit variable interests) with the VIE, including, but not limited to, the nature, purpose, size, and activities of the VIE, including how the VIE is financed. Paragraphs [810-10-25-49 through 25-54](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-49) provide guidance on how to determine whether a reporting entity has an implicit variable interest in a VIE. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)A reporting entity that is a primary beneficiary of a VIE or a reporting entity that holds a variable interest in a VIE but is not the entity's primary beneficiary shall disclose all of the following in interim and annual reporting periods: 1. a Its methodology for determining whether the reporting entity is the primary beneficiary of a VIE, including, but not limited to, significant judgments and assumptions made. One way to meet this disclosure requirement would be to provide information about the types of involvements a reporting entity considers significant, supplemented with information about how the significant involvements were considered in determining whether the reporting entity is the primary beneficiary. 2. b If facts and circumstances change such that the conclusion to consolidate a VIE has changed in the most recent financial statements (for example, the VIE was previously consolidated and is not currently consolidated), the primary factors that caused the change and the effect on the reporting entity's financial statements. 3. c Whether the reporting entity has provided financial or other support (explicitly or implicitly) during the periods presented to the VIE that it was not previously contractually required to provide or whether the reporting entity intends to provide that support, including both of the following: 1. 1 The type and amount of support, including situations in which the reporting entity assisted the VIE in obtaining another type of support 2. 2 The primary reasons for providing the support. 4. d Qualitative and quantitative information about the reporting entity's involvement (giving consideration to both explicit arrangements and implicit variable interests) with the VIE, including, but not limited to, the nature, purpose, size, and activities of the VIE, including how the VIE is financed. Paragraphs [810-10-25-49 through 25-54](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-49) provide guidance on how to determine whether a reporting entity has an implicit variable interest in a VIE. ##### [810-10-50-5B](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-5B) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:52aa8304ec0ca91f6032877b4567099300b48956ff889cda7637972c07761b79 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A VIE may issue voting equity interests, and the entity that holds a majority voting interest also may be the primary beneficiary of the VIE. If so, and if the VIE meets the definition of a [business](https://asc.understandingaccounting.org/glossary/b/#business "Paragraphs 805-10-55-3A805-10-55-4805-10-55-5805-10-55-6 and 805-10-55-8805-10-55-9 define what is considered a business.") and the VIE's assets can be used for purposes other than the settlement of the VIE's obligations, the disclosures in paragraph [810-10-50-5A](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-5A) are not required. #### Scope-Related Disclosures ##### [810-10-50-6](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-6) Pending content: yes Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:5cbd63967a577c34575b58f44847f6632f06d3d8d8fd3bca4f382edb60b318f0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A reporting entity that does not apply the guidance in the Variable Interest Entities Subsections to one or more VIEs or potential VIEs because of the condition described in paragraph [810-10-15-17(c)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17) shall disclose all the following information: 1. a The number of [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.") to which the guidance in the Variable Interest Entities Subsections is not being applied and the reason why the information required to apply this guidance is not available 2. b The nature, purpose, size (if available), and activities of the legal entities and the nature of the reporting entity's involvement with the legal entities 3. c The reporting entity's maximum exposure to loss because of its involvement with the legal entities 4. d The amount of income, expense, purchases, sales, or other measure of activity between the reporting entity and the legal entities for all periods presented. However, if it is not practicable to present that information for prior periods that are presented in the first set of financial statements for which this requirement applies, the information for those prior periods is not required. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)A reporting entity that does not apply the guidance in the Variable Interest Entities Subsections to one or more VIEs or potential VIEs because of the condition described in paragraph [810-10-15-17(c)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17) shall disclose all the following information in interim and annual reporting periods: 1. a The number of [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.") to which the guidance in the Variable Interest Entities Subsections is not being applied and the reason why the information required to apply this guidance is not available 2. b The nature, purpose, size (if available), and activities of the legal entities and the nature of the reporting entity's involvement with the legal entities 3. c The reporting entity's maximum exposure to loss because of its involvement with the legal entities 4. d The amount of income, expense, purchases, sales, or other measure of activity between the reporting entity and the legal entities for all periods presented. However, if it is not practicable to present that information for prior periods that are presented in the first set of financial statements for which this requirement applies, the information for those prior periods is not required. ##### [810-10-50-7](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:1f0d11ab580613dc16c0159f9162bdc46bdc348a9515369944bcb383909f24e2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). ##### [810-10-50-8](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:1b1b68ceca24b5a106fa00c33fda511d4826f49410d5709d15445948584ab7d2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). #### Aggregation of Certain Disclosures ##### [810-10-50-9](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-9) Pending content: yes Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:19427a6f91f992433b5b48496c2302ee3c0dbcdc82af0b96977d3b7872ec6500 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Disclosures about VIEs may be reported in the aggregate for similar entities if separate reporting would not provide more useful information to financial statement users. A reporting entity shall disclose how similar entities are aggregated and shall distinguish between: 1. a VIEs that are not consolidated because the reporting entity is not the primary beneficiary but has a variable interest 2. b VIEs that are consolidated. In determining whether to aggregate VIEs, the reporting entity shall consider quantitative and qualitative information about the different risk and reward characteristics of each VIE and the significance of each VIE to the entity. The disclosures shall be presented in a manner that clearly explains to financial statement users the nature and extent of an entity's involvement with VIEs. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)Disclosures about VIEs may be reported in the aggregate for similar entities if separate reporting would not provide more useful information to financial statement users. For interim and annual reporting periods, a reporting entity shall disclose how similar entities are aggregated and shall distinguish between: 1. a VIEs that are not consolidated because the reporting entity is not the primary beneficiary but has a variable interest 2. b VIEs that are consolidated. In determining whether to aggregate VIEs, the reporting entity shall consider quantitative and qualitative information about the different risk and reward characteristics of each VIE and the significance of each VIE to the entity. The disclosures shall be presented in a manner that clearly explains to financial statement users the nature and extent of an entity's involvement with VIEs. ##### [810-10-50-10](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:9cee71b17a7e901a2ce97f105b235722be983dec56ebf371fa20fcf2d3861112 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A reporting entity shall determine, in light of the facts and circumstances, how much detail it shall provide to satisfy the requirements of the Variable Interest Entities Subsections. A reporting entity shall also determine how it aggregates information to display its overall involvements with VIEs with different risk characteristics. The reporting entity must strike a balance between obscuring important information as a result of too much aggregation and overburdening financial statements with excessive detail that may not assist financial statement users to understand the reporting entity's financial position. For example, a reporting entity shall not obscure important information by including it with a large amount of insignificant detail. Similarly, a reporting entity shall not disclose information that is so aggregated that it obscures important differences between the types of involvement or associated risks. ##### [810-10-50-11](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:779e5e78ae28e7a0c5983ba5d21a6f479f4a98730d816d9e947ca9a458532509 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). ##### [810-10-50-12](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:c94b46c49f6803153f574954e20585fe7824b83adcd55c92c860e1e34ae6676d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). ##### [810-10-50-13](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:8b3a5180e6dd22cd931084756cf59dd89a07fb32ca35bcd0bcbc98772f60d859 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). ##### [810-10-50-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:d18f50e5e2a3d663678e37f896dc0f0ec8d36c378f014201a460b19478304e43 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). ##### [810-10-50-15](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:f0ee6f48c83431b4a6763c315bfb209b971d7f9074250968b73927b59f02d92d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). ##### [810-10-50-16](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:139cb392eb5dbdfa909e0217ade4bb50079b64dc37d091a580630de85413c93a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). ##### [810-10-50-17](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:1e92e5fba6ccef841f629edba09784c40cbce741184bbccb75164cf4691f55cb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). ##### [810-10-50-18](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:8af1330eeeb4b79b7ab9c20578b0836e74bc34ba5a4f229f519039edab36ee7d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). ##### [810-10-50-19](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:f93746fa53a40528210e5b8b49850f52e1146388917377753e6151ddf16a063b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). #### Collateralized Financing Entities ##### [810-10-50-20](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-20) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:4c01e64a265dfd149953cf0dbe44d41ef8fcec76fa362e170c64979687e60bb2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A reporting entity that consolidates a [collateralized financing entity](https://asc.understandingaccounting.org/glossary/c/#collateralized-financing-entity "A variable interest entity that holds financial assets, issues beneficial interests in those financial assets, and has no more than nominal equity. The beneficial interests have contractual recourse only to the related assets of the collateralized financing entity and are classified as financial liabilities. A collateralized financing entity may hold nonfinancial assets temporarily as a result of default by the debtor on the underlying debt instruments held as assets by the collateralized financing entity or in an effort to restructure the debt instruments held as assets by the collateralized financing entity. A collateralized financing entity also may hold other financial assets and financial liabilities that are incidental to the operations of the collateralized financing entity and have carrying values that approximate fair value (for example, cash, broker receivables, or broker payables).") and measures the financial assets and the financial liabilities using the measurement alternative in paragraphs [810-10-30-10 through 30-15](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-10) and [810-10-35-6 through 35-8](https://asc.understandingaccounting.org/asc/810/10/#810-10-35-6) shall disclose the information required by Topic 820 on fair value measurement and Topic 825 on financial instruments for the financial assets and the financial liabilities of the consolidated collateralized financing entity. ##### [810-10-50-21](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-21) Pending content: yes Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:c83d2cfcd305fd9a3e49db2d0c127ee8d27f21c851a175f7c1d29af31db84335 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For the less observable of the fair value of the financial assets and the fair value of the financial liabilities of the collateralized financing entity that is measured in accordance with the measurement alternative in paragraphs [810-10-30-10 through 30-15](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-10) and [810-10-35-6 through 35-8](https://asc.understandingaccounting.org/asc/810/10/#810-10-35-6) , a reporting entity shall disclose that the amount was measured on the basis of the more observable of the fair value of the financial liabilities and the fair value of the financial assets. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)For the less observable of the fair value of the financial assets and the fair value of the financial liabilities of the collateralized financing entity that is measured in accordance with the measurement alternative in paragraphs [810-10-30-10 through 30-15](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-10) and [810-10-35-6 through 35-8](https://asc.understandingaccounting.org/asc/810/10/#810-10-35-6) , a reporting entity shall disclose that the amount was measured on the basis of the more observable of the fair value of the financial liabilities and the fair value of the financial assets in interim and annual reporting periods. ##### [810-10-50-22](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-22) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:09.300Z to 2026-09-10T01:29:09.300Z Record version: sha256:15b5541d73d79ea006bf18ec6645f6415c2dd9933eadfc1c2d5203ecc5f407ee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The disclosures in paragraphs [810-10-50-20 through 50-21](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-20) do not apply to the financial assets and the financial liabilities that are incidental to the operations of the [collateralized financing entity](https://asc.understandingaccounting.org/glossary/c/#collateralized-financing-entity "A variable interest entity that holds financial assets, issues beneficial interests in those financial assets, and has no more than nominal equity. The beneficial interests have contractual recourse only to the related assets of the collateralized financing entity and are classified as financial liabilities. A collateralized financing entity may hold nonfinancial assets temporarily as a result of default by the debtor on the underlying debt instruments held as assets by the collateralized financing entity or in an effort to restructure the debt instruments held as assets by the collateralized financing entity. A collateralized financing entity also may hold other financial assets and financial liabilities that are incidental to the operations of the collateralized financing entity and have carrying values that approximate fair value (for example, cash, broker receivables, or broker payables).") and have carrying values that approximate fair value. Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:f76150c9ecf528707a6e44519f9b11d7af85b5fcf5380876feee20df4feea9a1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-10-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/810/10/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [810-10-55-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:ea512bd5ccf8a69856fb8f691122afd025c376bea1bea971957838a6124a27a8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples of how to assess individual noncontrolling rights facilitate the understanding of how to assess whether the rights of the noncontrolling shareholder or limited partner should be considered protective or participating and, if participating, whether the rights are substantive. An assessment is relevant for determining whether noncontrolling rights overcome the presumption of control by the majority shareholder or limited partner with a majority of [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.") through voting interests in an entity under the General Subsections of this Subtopic. Although the following examples illustrate the assessment of [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.") or [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."), the evaluation should consider all of the factors identified in paragraph [810-10-25-13](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-13) to determine whether the noncontrolling rights, individually or in the aggregate, provide for the holders of those rights to effectively participate in certain significant financial and operating decisions that are 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."): 1. a The rights of the noncontrolling shareholder or limited partner 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 the investee's existing business usually are protective and would not overcome the presumption of consolidation by the investor with a majority voting interest or limited partner with a majority of kick-out rights through voting interests in its investee. Whether a 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 shareholder or limited partner is necessary to incur additional indebtedness to finance an acquisition that is not in the investee's ordinary course of business, then the approval by the noncontrolling shareholder or limited partner would be considered a protective right. 2. b Existing facts and circumstances should be considered in assessing whether the rights of the noncontrolling shareholder or limited partner relating to an investee's incurring additional indebtedness are protective or participating rights. For example, if it is reasonably possible or probable that the investee will need to incur the level of borrowings that requires noncontrolling shareholder or limited partner approval in its ordinary course of business, the rights of the noncontrolling shareholder or limited partner would be viewed as substantive participating rights. 3. c The rights of the noncontrolling shareholder or limited partner 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 would be protective rights. 4. d The rights of the noncontrolling shareholder or limited partner relating to an investee'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 investee had the ability to purchase, rather than lease, the property without requiring approval of the noncontrolling shareholder or limited partner, then the rights of the noncontrolling shareholder or limited partner to block the investee from entering into a lease would not be substantive. 5. e The rights of the noncontrolling shareholder or limited partner relating to an investee'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 an investee does not have a collective bargaining agreement with a union or if the union does not represent a substantial portion of the investee's work force, then the rights of the noncontrolling shareholder or limited partner to approve or veto a new or broader collective bargaining agreement are not substantive. 6. f Provisions that govern what will occur if the noncontrolling shareholder or limited partner blocks the action of an [owner](https://asc.understandingaccounting.org/glossary/o/#owners "Used broadly to include holders of ownership interests (equity interests) of investor-owned entities, mutual entities, or not-for-profit entities. Owners include shareholders, partners, proprietors, or members or participants of mutual entities. Owners also include owner and member interests in the net assets of not-for-profit entities.") of a majority voting interest or general partner need to be considered to determine whether the right of the noncontrolling shareholder or limited partner to block the action has substance. For example, if the shareholder or partnership agreement provides that if the noncontrolling shareholder or limited partner blocks the approval of an operating budget, then the budget simply defaults to last year's budget adjusted for inflation, and if the investee is a mature business for which year-to-year operating budgets would not be expected to vary significantly, then the rights of the noncontrolling shareholder or limited partner to block the approval of the operating budget do not allow the noncontrolling shareholder or limited partner to effectively participate and are not substantive. 7. g Noncontrolling 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 the entity's ordinary course of business, as is the case for some patent-holding companies and other entities, then the noncontrolling rights may be considered substantive participating rights. 8. h A noncontrolling shareholder or limited partner has the right to veto the annual operating budget for the first X years of the relationship. Based on the facts and circumstances, during the first X years of the relationship this right may be a substantive participating right. However, following Year X there is a significant change in the exercisability of the noncontrolling right (for example, the veto right terminates). As of the beginning of the period following Year X, that right would no longer be a substantive participating right and would not overcome the presumption of consolidation by the investor with a majority voting interest or limited partner with a majority of kick-out rights through voting interests in its investee. ##### [810-10-55-1A](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-1A) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:397fd2b2ce90bcc27680d861ceb5a1679015764c3d22492e27a85ecec8db17c3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance for deconsolidation of a [subsidiary](https://asc.understandingaccounting.org/glossary/s/#subsidiary "An entity, including an unincorporated entity such as a partnership or trust, in which another entity, known as its parent, holds a controlling financial interest. (Also, a variable interest entity that is consolidated by a primary beneficiary.)"). If an asset one entity transfers to a second entity in exchange for 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.") in that second entity is a subsidiary, the gain or loss of a controlling financial interest in that subsidiary is accounted for in accordance with this Subtopic. ##### [810-10-55-1B](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-1B) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:7e4d5b6a2d6c40af94b762c57eadf6a1e352426b9b61468d209fa44b061deaa2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To justify the preparation of consolidated financial statements, the controlling financial interest shall rest directly or indirectly in one of the entities included in the consolidation. There are circumstances, however, in which combined financial statements (as distinguished from consolidated financial statements) of commonly controlled entities are likely to be more meaningful than their separate financial statements. For example, combined financial statements would be useful if one individual owns a controlling financial interest in several entities that are related in their operations. Combined financial statements might also be used to present the financial position and results of operations of entities under common management. ##### [810-10-55-2](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:ef0c4623240fa9418b568f1b6b1a42daf2252d0f33d37a0c4770ba6abca507bd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. These paragraphs expand on the guidance in paragraph [810-10-25-16](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-16). A last-in, first-out (LIFO) liquidation (also called a decrement) occurs when the number of units (or total base year cost if dollar value LIFO is used) in a LIFO pool at year end is less than that at the beginning of the year, causing prior years' costs, rather than current year's costs, to be charged to current year's income. For example, in periods of rising prices, prior years' costs are less than current year's costs and, in such periods, charging prior years' costs to current year's income results in reporting current year's net income higher than it would be reported without a liquidation. ##### [810-10-55-3](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:29e8ad48ddb5ed5b9ac1d5199e95b71388281c43f7498df7fd6029955af3ee9d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Accounting for a LIFO liquidation is more complex with intra-entity transfers of inventories. Paragraph [810-10-10-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-10-1) states that the purpose of [consolidated financial statements](https://asc.understandingaccounting.org/glossary/c/#consolidated-financial-statements "The financial statements of a consolidated group of entities that include a parent and all its subsidiaries presented as those of a single economic entity.") is to present the results of operations and the financial position of the [parent](https://asc.understandingaccounting.org/glossary/p/#parent "An entity that has a controlling financial interest in one or more subsidiaries. (Also, an entity that is the primary beneficiary of a variable interest entity.)") and its subsidiaries as if the [consolidated group](https://asc.understandingaccounting.org/glossary/c/#consolidated-group "A parent and all its subsidiaries.") were a single economic entity. Under that guidance intra-entity profit on assets remaining within the group shall be eliminated. Results of operations and financial position, therefore, shall not be affected solely because of inventory transfers within a reporting entity. Inventory transferred between or from LIFO pools may cause LIFO inventory liquidations that could affect the amount of intra-entity profit to be eliminated. ##### [810-10-55-4](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:bddfd96a00a5dd35edb36a7df1fe5d6750036ee9215f5def6c52939e9c932b1d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Many different approaches are used by entities in eliminating such profit. Each reporting entity shall adopt an approach that, if consistently applied, defers reporting intra-entity profits from transfers within a reporting entity until such profits are realized by the reporting entity through dispositions outside the consolidated group. The approach shall be suited to the entity's individual circumstances. ##### [810-10-55-4A](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4A) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:c1738da21bbf2a2b0fdba9b8261979828e4258c240d4f0d046e01c4e17b1f4d2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All of the following are circumstances that result in deconsolidation of a subsidiary under paragraph [810-10-40-4](https://asc.understandingaccounting.org/asc/810/10/#810-10-40-4): 1. a A parent sells all or part of its ownership interest in its subsidiary and, as a result, the parent no longer has a controlling financial interest in the subsidiary. 2. b The expiration of a contractual agreement that gave control of the subsidiary to the parent. 3. c The subsidiary issues shares, which reduces the parent's ownership interest in the subsidiary so that the parent no longer has a controlling financial interest in the subsidiary. 4. d The subsidiary becomes subject to the control of a government, court, administrator, or regulator. ##### [810-10-55-4B](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4B) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:f0ebe362a20c6cbb4d4ecaa505341df7599d9557b34a5ead65beb26562d3cacb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Cases illustrate the application of the guidance in paragraph [810-10-45-23](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-23) on accounting for changes in a parent's ownership interest in a subsidiary: 1. a Change results in recognition of noncontrolling interest (Case A) 2. b Change results in increase in noncontrolling interest (Case B) 3. c Change if entity has accumulated other comprehensive income (Case C). ##### [810-10-55-4C](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4C) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:a15562d44301a7af1b119bb5db645fb79dab409248df4375718e2aa9eb242b51 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Subsidiary A has 10,000 shares of common stock outstanding, all of which are owned by its parent, Entity ABC. The carrying amount of Subsidiary A's equity is $200,000. Entity ABC sells 2,000 of its shares in Subsidiary A to an unrelated entity for $50,000 in cash, reducing its ownership interest from 100 percent to 80 percent. That transaction is accounted for by recognizing a noncontrolling interest in the amount of $40,000 ($200,000 × 20 percent). The $10,000 excess of the cash received ($50,000) over the adjustment to the carrying amount of the noncontrolling interest ($40,000) is recognized as an increase in additional paid-in capital attributable to Entity ABC. If the parent is 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), the $10,000 increase in additional paid-in capital in this Example is recognized instead as an increase in net assets, generally of the without donor restrictions class. Example 1 (see paragraphs [958-810-55-17 through 55-25](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-17) ) provides additional guidance for NFPs. ##### [810-10-55-4D](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4D) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:5354a28a40cd408dab19b601ff88358fd6f4e8fff1d514fae1844ba1f95d8c28 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Subsidiary A has 10,000 shares of common stock outstanding. Of those shares, 9,000 are owned by its parent, Entity ABC, and 1,000 are owned by other shareholders (a noncontrolling interest in Subsidiary A). The carrying amount of Subsidiary A's equity is $300,000. Of that amount, $270,000 is attributable to Entity ABC, and $30,000 is a noncontrolling interest in Subsidiary A. Subsidiary A issues 2,000 previously unissued shares to a third party for $120,000 in cash, reducing Entity ABC's ownership interest in Subsidiary A from 90 percent to 75 percent (9,000 shares owned by Entity ABC ÷ 12,000 issued shares). ##### [810-10-55-4E](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4E) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:ce9daf5718c0fc6daa35b0dcafbc5e6e5db8f1f1ccb3fb0d5556dfc566831d7b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Even though the percentage of Entity ABC's ownership interest in Subsidiary A is reduced when Subsidiary A issues shares to the third party, Entity ABC's investment in Subsidiary A increases to $315,000, calculated as 75 percent of Subsidiary A's equity of $420,000 ($300,000 + $120,000). Therefore, Entity ABC recognizes a $45,000 increase in its investment in Subsidiary A ($315,000 - $270,000) and a corresponding increase in its additional paid-in capital (that is, the additional paid-in capital attributable to Entity ABC). In addition, the noncontrolling interest is increased to $105,000, calculated as 25 percent of $420,000. If the parent is an NFP, the $45,000 increase in additional paid-in capital in this example is recognized instead as an increase in net assets, generally of the without donor restrictions class. Example 1 (see paragraphs [958-810-55-17 through 55-25](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-17) ) provides additional guidance for NFPs. ##### [810-10-55-4F](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4F) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:8759d5671b8ba62f37a71a5db73e517b5fa0f6d294392cb08e019367f9e99731 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Subsidiary A has 10,000 shares of common stock outstanding. Of those shares, 8,000 are owned by its parent, Entity ABC, and 2,000 are owned by other shareholders (a noncontrolling interest in Subsidiary A). The carrying amount of the noncontrolling interest is $48,000, which includes $4,000 of accumulated other comprehensive income. Entity ABC pays $30,000 in cash to purchase 1,000 shares held by the noncontrolling shareholders (50 percent of the noncontrolling interest), increasing its ownership interest from 80 percent to 90 percent. That transaction is recognized by reducing the carrying amount of the noncontrolling interest by $24,000 ($48,000 × 50 percent). The $6,000 excess of the cash paid ($30,000) over the adjustment to the carrying amount of the noncontrolling interest ($24,000) is recognized as a decrease in additional paid-in capital attributable to Entity ABC. In addition, Entity ABC's share of accumulated other comprehensive income is increased by $2,000 ($4,000 × 50 percent) through a corresponding decrease in additional paid-in capital attributable to Entity ABC. ##### [810-10-55-4G](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4G) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:e3bbc28e2bb1bd73befa25c3ca15e3c42289a747a6b5b1ea5556a5cccfa67acc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the application of this Subtopic's presentation and disclosure guidance by a parent with one or more less-than-wholly-owned subsidiaries. ##### [810-10-55-4H](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4H) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:c735e932904443473124c5a1f8465f43a9da4da012424ec9c34c9b7063057901 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example involves all of the following assumptions: 1. a Entity ABC has one subsidiary, Subsidiary A. 2. b The tax rate for all years is 40 percent. 3. c Entity ABC has 200,000 shares of common stock outstanding and pays dividends of $10,000 each year on those common shares. Entity ABC has no potentially dilutive shares. 4. d Subsidiary A has 10,000 shares of common stock outstanding and does not pay dividends. 5. e Entity ABC owns all 10,000 shares in Subsidiary A for the entire year 20X1. 6. f On June 30, 20X1, Subsidiary A purchases a portfolio of securities for $100,000 and classifies those securities as available for sale. 7. g On December 31, 20X1, the carrying amount of the available-for-sale securities is $105,000. 8. h For the year ended December 31, 20X1, the amount of Subsidiary A's net income included in the consolidated financial statements is $24,000. 9. i On January 1, 20X2, Entity ABC sells 2,000 of its shares in Subsidiary A to an unrelated entity for $50,000 in cash, reducing its ownership interest from 100 percent to 80 percent. 10. j Immediately before the January 1, 20X2 sale, Subsidiary A's equity was as follows: - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-CFA42057-FD80-4A3A-B84B-06FEF27C6077-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 " 11. k The January 1, 20X2 sale of Subsidiary A's shares by Entity ABC is accounted for as an equity transaction in the consolidated financial statements, as follows: 1. 1 A noncontrolling interest is recognized in the amount of $41,000 ($205,000 × 20 percent). 2. 2 Additional paid-in capital attributable to Entity ABC is 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 Additional paid-in capital attributable to Entity ABC is also increased by $1,000, which represents the carrying amount of Subsidiary A's accumulated other comprehensive income related to the ownership interest sold to the noncontrolling interest ($5,000 × 20 percent = $1,000). Accumulated other comprehensive income attributable to Entity ABC is decreased by a corresponding amount. 4. 4 The journal entry to record the sale of Subsidiary A's shares to the noncontrolling shareholders is as follows: - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-AFBFF6EB-3C11-4A4C-9360-71911B055150-low.gif) Cash "50,000" Accumulated other comprehensive income (Entity ABC) "1,000" Noncontrolling interest "41,000" Additional paid-in capital (Entity ABC) "10,000" 12. l For the year ended December 31, 20X2, the amount of Subsidiary A's net income included in the consolidated financial statements is $20,000. 13. m On January 1, 20X3, Entity ABC purchases 1,000 shares in Subsidiary A from the noncontrolling shareholders (50 percent of the noncontrolling interest) for $30,000 for cash, increasing its ownership interest from 80 percent to 90 percent. 14. n Immediately before the January 1, 20X3 purchase, the carrying amount of the noncontrolling interest in Subsidiary A was $48,000, which included $4,000 in accumulated other comprehensive income. 15. o The January 1, 20X3 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 is reduced by $24,000 ($48,000 × 50 percent interest acquired by Entity ABC). 2. 2 Additional paid-in capital of Entity ABC is 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 Additional paid-in capital of Entity ABC is also decreased by $2,000, which represents the carrying amount of Subsidiary A's accumulated other comprehensive income related to the ownership interest purchased from the noncontrolling shareholders ($4,000 × 50 percent = $2,000). 4. 4 Accumulated comprehensive income attributable to Entity ABC is increased by a corresponding amount ($2,000). 5. 5 The 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-BD409282-6189-4183-A0D0-988EB649B5AF-low.gif) Noncontrolling interest "24,000" Additional paid-in capital (Entity ABC) "8,000" Accumulated other comprehensive income (Entity ABC) "2,000" Cash "30,000" 16. p For the year ended December 31, 20X3, the amount of Subsidiary A's net income included in the consolidated financial statements is $15,000. ##### [810-10-55-4I](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4I) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:c19440620f29a2e05487ce992961a81ea3528fd0ba004dcea08a7414fd5a9cbb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This consolidated statement of financial position illustrates application of the requirement in paragraph [810-10-45-16](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-16) that Entity ABC present the noncontrolling interest in the consolidated statement of financial position within equity, but separately from the parent's equity. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-73007776-F783-4D7B-8ED5-324BC53E79F8-low.gif) Entity ABC Consolidated Statement of Financial Position As of December 31 20X3 20X2 Assets: Cash " $570,000 " " $475,000 " Accounts receivable " 125,000 " " 110,000 " Available-for-sale 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 " - - - Equity: Entity ABC shareholders' equity: " Common stock, $1 par " " 200,000 " " 200,000 " Paid-in capital " 42,000 " " 50,000 " Retained earnings " 194,500 " " 167,000 " Accumulated other comprehensive income " 22,500 " " 16,000 " Total Entity ABC shareholders' equity " 459,000 " " 433,000 " Noncontrolling interest " 26,000 " " 48,000 " Total equity " 485,000 " " 481,000 " Total liabilities and equity " $1,040,000 " " $940,000 " ##### [810-10-55-4J](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4J) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:07b3bda0b166b6d1a3aff6c02fb594283a8a19c40a0e8fdbfe9b8141222ced0b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This consolidated statement of income illustrates the requirements in paragraph [810-10-50-1A](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-1A) that the amounts of consolidated net income and the net income attributable to Entity ABC and the noncontrolling interest be presented separately on the face of the consolidated income statement. It also illustrates the requirement in paragraph 810-10-50-1A(b) that the amounts of income from continuing operations and discontinued operations attributable to Entity ABC should be disclosed. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-378CD685-09E3-403C-BA08-DC0C25F384A6-low.gif) Entity ABC Consolidated Statement of Income Year Ended December 31 20X3 20X2 20X1 Revenues " $395,000 " " $360,000 " " $320,000 " Expenses " (330,000)" " (305,000)" " (270,000)" " Income from continuing operations, before tax " " 65,000 " " 55,000 " " 50,000 " Income tax expense " (26,000)" " (22,000)" " (20,000)" " Income from continuing operations, net of tax " " 39,000 " " 33,000 " " 30,000 " " Discontinued operations, net of tax " — " (7,000)" — Net income " 39,000 " " 26,000 " " 30,000 " " Less: Net income attributable to the noncontrolling interest " " (1,500)" " (4,000)" — Net income attributable to Entity ABC " $37,500 " " $22,000 " " $30,000 " Earnings per share—basic and diluted: " Income from continuing operations attributable to Entity ABC common shareholders" $0.19 $0.14 $0.15 " Discontinued operations attributable to Entity ABC common shareholders" — (0.03) — Net income attributable to Entity ABC common shareholders $0.19 $0.11 $0.15 "Weighted-average shares outstanding, basic and diluted" " 200,000 " " 200,000 " " 200,000 " Amounts attributable to Entity ABC common shareholders: " Income from continuing operations, net of tax " " $37,500 " " $27,600 " " $30,000 " " Discontinued operations, net of tax " — " (5,600)" — Net income " $37,500 " " $22,000 " " $30,000 " ##### [810-10-55-4K](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4K) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:be38f3b822498d459305be32cf51e7dfd27c9855618b3cb05ce7107273059bc8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This statement of consolidated comprehensive income illustrates the requirements in paragraph [810-10-50-1A(a)](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-1A) that the amounts of consolidated comprehensive income and comprehensive income attributable to Entity ABC and the noncontrolling interest be presented separately on the face of the consolidated statement in which comprehensive income is presented. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-72CC5DF5-291B-4C2A-9902-E45224775C2C-low.gif) Entity ABC Statement of Consolidated Comprehensive Income Year Ended December 31 20X3 20X2 20X1 Net income " $39,000 " " $26,000 " " $30,000 " " Other comprehensive income, net of tax: " " Unrealized holding gain on available-for-sale securities, net of tax " " 5,000 " " 15,000 " " 5,000 " " Total other comprehensive income, net of tax " " 5,000 " " 15,000 " " 5,000 " Comprehensive income " 44,000 " " 41,000 " " 35,000 " Comprehensive income attributable to the noncontrolling interest " (2,000)" " (7,000)" — Comprehensive income attributable to Entity ABC " $42,000 " " $34,000 " " $35,000 " ##### [810-10-55-4L](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4L) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:d0fffc9c235ce11ca16c4d264233b2f515ad33d13f9dcbd1e7487c2926a6d49d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This consolidated statement of changes in equity illustrates the requirements in paragraph [810-10-50-1A(c)](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-1A) that Entity ABC present a reconciliation at the beginning and the end of the period of the carrying amount of total equity, equity attributable to Entity ABC, and equity attributable to the noncontrolling interest. It also illustrates that because the noncontrolling interest is part of the equity of the consolidated group, it is presented in the statement of changes in equity. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-DE9493EF-0702-4192-8CCA-55B569011742-low.gif) Entity ABC Consolidated Statement of Changes in Equity " Year Ended December 31, 20X3 " Entity ABC Shareholders Accumulated Other Comprehensive Income Retained Earnings " Common Stock " " Paid-in Capital " " Noncontrolling Interest " Total Beginning balance " $481,000 " " $167,000 " " $16,000 " " $200,000 " " $50,000 " " $48,000 " " Purchase of subsidiary shares from noncontrolling interest " " (30,000)" " 2,000 " " (8,000)" " (24,000)" Net income (loss) " 39,000 " " 37,500 " " 1,500 " " Other comprehensive income (loss), net of tax: " Unrealized gains on securities " 5,000 " " 4,500 " 500 Other comprehensive income (loss) " 5,000 " Dividends paid on common stock " (10,000)" " (10,000)" — — — — Ending balance " $485,000 " " $194,500 " " $22,500 " " $200,000 " " $42,000 " " $26,000 " Entity ABC Consolidated Statement of Changes in Equity " Year Ended December 31, 20X2 " Entity ABC Shareholders "Accumulated Comprehensive Income" " Retained Earnings " Common Stock " Paid-in Capital " Noncontrolling Interest Total Beginning balance " $400,000 " " $155,000 " " $5,000 " " $200,000 " " $40,000 " $ — Sale of subsidiary shares to noncontrolling interest " 50,000 " " (1,000)" " 10,000 " " 41,000 " Net income (loss) " 26,000 " " 22,000 " " 4,000 " " Other comprehensive income, net of tax: " Unrealized gains on securities " 15,000 " " 12,000 " " 3,000 " Other comprehensive income " 15,000 " Dividends paid on common stock " (10,000)" " (10,000)" — — — — Ending balance " $481,000 " " $167,000 " " $16,000 " " $200,000 " " $50,000 " " $48,000 " ##### [810-10-55-4M](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4M) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:d9ac17c603fab6bc43207962a7fc068e2186369b33c0beadaefbbb59d8ab9892 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This schedule illustrates the requirements in paragraph [810-10-50-1A(d)](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-1A) that Entity ABC present in notes to the consolidated financial statements a separate schedule that shows the effects of changes in Entity ABC's ownership interest in its subsidiary on Entity ABC's equity. This schedule is only required if the parent's ownership interest in a subsidiary changes in any periods presented in the consolidated financial statements. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-32AFA402-2732-4F3D-A860-3FCA1B97DC02-low.gif) Entity ABC Notes to Consolidated Financial Statements " Net Income Attributable to Entity ABC and Transfers (to) from the Noncontrolling Interest " Year Ended December 31 The purpose of this schedule is to disclose the effects of changes in Entity ABC's ownership interest in its subsidiary on Entity ABC's equity. 20X3 20X2 20X1 Net income attributable to Entity ABC "$ 37,500" $- "$ 22,000" "$ 30,000" Transfers (to) from the noncontrolling interest " Increase in Entity ABC's paid-in capital for sale of 2,000 Subsidiary A common shares " — " 10,000 " — " Decrease in Entity ABC's paid-in capital for purchase of 1,000 Subsidiary A common shares " " (8,000)" — — Net transfers (to) from noncontrolling interest " (8,000)" " 10,000 " — " Change from net income attributable to Entity ABC and transfers (to) from noncontrolling interest " "$ 29,500" "$ 32,000" " $30,000 " ##### [810-10-55-4N](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4N) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:158fc790c76c1e5bd92a4dda2ddf9827e9ec10ca539c0c9c90cb3b22a60e23b1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraph [810-10-15-14(b)(1)(ii)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14). Cases A, B, C, F, and G illustrate arrangements in which the limited partnership agreement requires a simple majority vote of the limited partnership's kick-out rights through voting interests to remove the general partner and the general partner cannot vote. Cases D and E demonstrate arrangements in which the limited partnership agreement requires a two-thirds vote and a unanimous vote, respectively, of the limited partnership's kick-out rights through voting interests to remove the general partner and the general partner cannot vote. To illustrate the application of the thresholds to exercise kick-out rights through voting interests for limited partnerships in paragraph [810-10-15-14(b)(1)(ii)(01)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14), consider the following cases: 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 of more than a simple majority (Case D) 5. e Four equal-interest limited partners with a required unanimous vote of the limited partnership's kick-out rights through voting interests (Case E) 6. f Limited partner and general partner with a required simple majority percentage of the limited partnership's kick-out rights through voting interests—limited partner consolidates (Case F) 7. g Four equal-interest limited partners with a required simple majority percentage of the limited partnership's kick-out rights through voting interests—no partner consolidates (Case G). ##### [810-10-55-4O](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4O) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:d54463dadefa60cc1f4f1c53041cb30719c219d2eec8941cd160ff2db1b6d67f 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 partnership's kick-out rights through 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. Presuming the [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.") are substantive, a limited partnership that entitles any individual limited partner to remove the general partner or a limited partnership that requires a vote of two of the limited partners to remove the general partner would not meet the condition in paragraph [810-10-15-14(b)(1)(ii)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14), meaning the partners would not lack the power through voting rights or similar rights to direct the activities of the partnership that most significantly impact the partnership's economic performance. Therefore, assuming none of the other criteria in paragraph [810-10-15-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14) are met for the limited partnership to be considered a variable interest entity (VIE), the limited partnership would be considered a voting interest entity. However, if a vote of all three limited partners is required to remove the general partner and the limited partners do not possess substantive participating rights, the limited partnership would meet the condition in paragraph [810-10-15-14(b)(1)(ii)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14) because the required vote is more than a simple majority of the limited partnership's kick-out rights through voting interests. Accordingly, the limited partnership would be considered a VIE. ##### [810-10-55-4P](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4P) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:ae09c7c505fc101f00a9e1062b7b6f519a6eff69710e13020e654e9bff6e629e 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 amount of the limited partnership's kick-out rights through voting interests. In this Case, a simple majority of the limited partnership's kick-out rights through voting interests would require a vote of both limited partners. Presuming the kick-out rights are substantive, a limited partnership entitling any individual limited partner to remove the general partner or a limited partnership that requires a vote of both limited partners to remove the general partner would not meet the condition in paragraph [810-10-15-14(b)(1)(ii)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14), meaning the partners would not lack the power through voting rights or similar rights to direct the activities of the partnership that most significantly impact the partnership's economic performance. Therefore, assuming none of the other criteria in paragraph [810-10-15-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14) are met for the limited partnership to be considered a VIE, the limited partnership would be considered a voting interest entity. ##### [810-10-55-4Q](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4Q) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:55a40a757f327ee870a7dc2e87732e17b04ca6c3c018fe8d950862dba5573d9d 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 amount of the limited partnership's kick-out rights through voting interests. In this Case, a simple majority of the limited partnership's kick-out rights through voting interests would require a vote of 51 limited partners. Presuming the kick-out rights are substantive, a limited partnership that requires a vote of less than 52 limited partners to remove the general partner would not meet the condition in paragraph [810-10-15-14(b)(1)(ii)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14), meaning the partners would not lack the power through voting rights or similar rights to direct the activities of the partnership that most significantly impact the partnership's economic performance. Therefore, assuming none of the other criteria in paragraph [810-10-15-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14) are met for the limited partnership to be considered a VIE, the limited partnership would be considered a voting interest entity. However, if a vote of 52 or more limited partners is required to remove the general partner and the limited partners do not possess substantive participating rights, that limited partnership would meet the condition in paragraph [810-10-15-14(b)(1)(ii)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14) because the required vote is more than a simple majority of the limited partnership's kick-out rights through voting interests. Accordingly, the limited partnership would be considered a VIE. ##### [810-10-55-4R](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4R) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:9e7a0407a491d173213dde12a72f0ae246f200fd4ca4541527971f48b71d3de0 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 66.6 percent of the limited partnership's kick-out rights through voting interests to remove the general partner: 1. a Equal-interest limited partners (Case D1) 2. b Limited partners with unequal interests (Case D2). ##### [810-10-55-4S](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4S) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:a7d935ec70d4728d48e04289aa8b5b9dc69729f47b411c4c95b6eceb32d15bbb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. There are 3 independent limited partners (none of which have any relationship to the general partner) that each hold an equal percentage (33.33 percent) of the limited partnership's kick-out rights through voting interests. A vote of 2 of the 3 limited partners represents 66.7 percent of the limited partnership's kick-out rights through voting interests, which also represents the smallest possible combination that is at least a simple majority of the limited partnership's kick-out rights through voting interests. Presuming the kick-out rights are substantive, the limited partnership would not meet the condition in paragraph [810-10-15-14(b)(1)(ii)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14), meaning the partners would not lack the power through voting rights or similar rights to direct the activities of the partnership that most significantly impact the partnership's economic performance. Therefore, assuming none of the other criteria in paragraph [810-10-15-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14) are met for the limited partnership to be considered a VIE, the limited partnership would be considered a voting interest entity. ##### [810-10-55-4T](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4T) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:db0a04da270eeed66fee46dba31c24f64ce38a6e988fed79683b40e1b4880d10 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. There are 3 independent limited partners (none of which have any relationship to the general partner) that hold 45 percent (Limited Partner 1), 25 percent (Limited Partner 2), and 30 percent (Limited Partner 3) of the limited partnership's kick-out rights through 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 partnership's kick-out rights through voting interests and would satisfy the 66.6 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 partnership's kick-out rights through voting interests; however, their kick-out rights (55 percent) would not meet the required threshold of 66.6 percent to remove the general partners. Accordingly, assuming the limited partners do not possess substantive participating rights, the limited partnership would meet the condition in paragraph [810-10-15-14(b)(1)(ii)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14), meaning the partners would lack the power through voting rights or similar rights to direct the activities of the partnership that most significantly impact the partnership's economic performance because the smallest possible combination (Limited Partner 2 and Limited Partner 3) that represents at least a simple majority of the limited partnership's kick-out rights through voting interests cannot remove the general partners. Accordingly, the limited partnership would be considered a VIE. ##### [810-10-55-4U](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4U) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:cb5cbbfc2fa1f39c633df3d08a8e6ef369d8a2f379ad19c9407f5f09bf4aa8e0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume that there are 4 independent limited partners (none of which have any relationship to the general partner) that each own 10 percent of the equity of the limited partnership in the form of limited partnership voting interests. The general partner owns 60 percent of the equity of the limited partnership and does not have kick-out rights through voting interests. The limited partners have kick-out rights through voting interests, but the limited partners must vote unanimously to kick out the general partner. Assuming the limited partners do not possess substantive participating rights, the limited partnership would meet the condition in paragraph [810-10-15-14(b)(1)(ii)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14), meaning the partners would lack the power through voting rights or similar rights to direct the activities of the partnership that most significantly impact the partnership's economic performance because more than a simple majority of kick-out rights through voting interests is required to remove the general partner. Accordingly, the limited partnership would be considered a VIE. ##### [810-10-55-4V](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4V) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:fbf0c03d48b99d1c967f27833d48123e485dab754ca007f1a2d7b34c3fd2f069 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume that there is an independent limited partner (who does not have any relationship with the general partner) that holds 40 percent of the equity of the limited partnership in the form of limited partnership voting interests. The general partner owns 60 percent of the equity of the limited partnership and does not have kick-out rights through voting interests. The limited partner has kick-out rights through voting interests, and a vote of a simple majority of the kick-out rights through voting interests to remove the general partner is required. Therefore, presuming the kick-out rights are substantive, the limited partnership would not meet the condition in paragraph [810-10-15-14(b)(1)(ii)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14), meaning the partners would not lack the power through voting rights or similar rights to direct the activities of the partnership that most significantly impact the partnership's economic performance because the single limited partner is able to exercise the kick-out rights unilaterally. Assuming none of the other criteria in paragraph [810-10-15-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14) are met for the limited partnership to be considered a VIE, the limited partnership would be considered a voting interest entity. Accordingly, the limited partner that holds 40 percent of the equity of the limited partnership in the form of limited partnership voting interests would be deemed to have a controlling financial interest in the limited partnership on the basis of the guidance in paragraph [810-10-25-1A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-1A). ##### [810-10-55-4W](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4W) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:102cab42b7ef1abbb1b7262e8e84a5a0e94c2a6a74af36bf0982b59e953ead35 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume that there are 4 independent limited partners that each own 10 percent of the equity of the limited partnership in the form of limited partnership voting interests. The general partner owns 60 percent of the equity of the limited partnership and does not have kick-out rights through voting interests. The limited partners have kick-out rights through voting interests, and a vote of a simple majority of the kick-out rights through voting interests to remove the general partner is required. Therefore, presuming the kick-out rights are substantive, the limited partnership would not meet the condition in paragraph [810-10-15-14(b)(1)(ii)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14), meaning the partners would not lack the power through voting rights or similar rights to direct the activities of the partnership that most significantly impact the partnership's economic performance. Assuming none of the other criteria in paragraph [810-10-15-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14) are met for the limited partnership to be considered a VIE, the limited partnership would be considered a voting interest entity. Accordingly, no partner would be deemed to have a controlling financial interest in the limited partnership on the basis of the guidance in paragraph [810-10-25-1A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-1A) because no single limited partner owns a majority of the limited partnership's kick-out rights through voting interests. Therefore, no partner consolidates the limited partnership. ### Variable Interest Entities ##### [810-10-55-5](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:11b6a4fb8851364ef59ec69f1325f21a846e0888bbaf736fa57fa76a4de84812 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). ##### [810-10-55-6](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:672c36a84771e7a69fdb67ed7df2788d1b34d24618b2b5adb479f7d6f5025a10 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). ##### [810-10-55-7](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:ea726d208afb3d32fea9e61236a63b8ea31795f4ffe74df2ae58ca4bd0abfcae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). ##### [810-10-55-8](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:4c6b801442f731cb85daa45a720259e7ca85975b5b1411da7bf303717b2dddc3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). ##### [810-10-55-8A](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-8A) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:7bc2b4c68b92c462f43a9c580bd20dd4895e8fc7a460b591bef9a85ecb50578b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An asset management company creates a series fund structure in which there are multiple mutual funds (Fund A, Fund B, and Fund C) within one (umbrella) trust. Each mutual fund, referred to as a series fund, represents a separate structure and [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."). The asset management company sells shares in each series fund to external shareholders. Each series fund is required to comply with the requirements included in the Investment Company Act of 1940 for registered mutual funds. ##### [810-10-55-8B](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-8B) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:7c32b172b56e12b80e1383a6bb0ef45bc0c8b98d1a78fceff7ad3a5ddccaa5be Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The purpose, objective, and strategy of each series fund are established at formation and agreed upon by the shareholders in accordance with the operating agreements. Returns of each series fund are allocated only to that respective fund's shareholders. There is no cross-collateralization among the individual series funds. Each series fund has its own fund management team, employed by the asset management company, which has the ability to carry out the investment strategy approved by the fund shareholders and manage the investments of the series fund. The Board of Trustees is established at the (umbrella) trust level. ##### [810-10-55-8C](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-8C) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:9b2af9638c2090f55128a547fa6e0c5cbfc4f0f63a4a919b2065e0342432cd74 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The asset management company is compensated on the basis of an established percentage of assets under management in the respective series funds for directing the activities of each fund within its stated objectives. The fees paid to the asset management company are both of the following: 1. a Compensation for services provided and commensurate with the level of effort required to provide the services 2. b Part of service arrangements that include only terms, conditions, or amounts that are customarily present in arrangements for similar services negotiated at arm's length. ##### [810-10-55-8D](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-8D) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:50e34aa77b440b20db8e791f43d8bdadb71aa788930d4addc73d7ec77b9e618e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The asset management company has sold 65 percent of the shares in Fund A to external shareholders and holds the remaining 35 percent of shares in Fund A. ##### [810-10-55-8E](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-8E) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:fa0d3a7f00823fcb09fb51e2d329de2bed665851e82da5a5a5ca997dbe7e0849 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The shareholders in each series fund have the ability through voting rights to do the following: 1. a Remove and replace the Board of Trustees 2. b Remove and replace the asset management company 3. c Vote on the compensation of the asset management company 4. d Vote on changes to the fundamental investment strategy of the fund 5. e Approve the sale of substantially all of the assets of the fund 6. f Approve a merger and/or reorganization of the fund 7. g Approve the liquidation or dissolution of the fund 8. h Approve charter and bylaw amendments 9. i Increase the authorized number of shares. ##### [810-10-55-8F](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-8F) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:1db3384b2052a520a499d8c46707e0c18720bd334f37f0953b48ef057c4373a1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For this series fund structure, the voting rights in paragraph [810-10-55-8E(a)](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-8E) are exercised at the (umbrella) trust level. That is, a simple majority vote of shareholders of all of the series funds (Fund A, Fund B, and Fund C) is required to exercise the voting right to remove and replace the Board of Trustees of the (umbrella) trust. However, the voting rights in paragraph [810-10-55-8E(b) through (i)](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-8E) are series fund-level rights. That is, only a simple majority vote of Series Fund A's shareholders is required to exercise the voting rights in paragraph [810-10-55-8E(b) through (i)](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-8E) for Series Fund A. ##### [810-10-55-8G](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-8G) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:f85877c82ef5ac192e8b06ff88c62ed493b0ad0e6a40cde33514cd47fbfe172d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. According to paragraph [810-10-15-14(b)(1)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14), one condition for a legal entity to be considered a VIE is that, as a group, the holders of the equity investment at risk lack the power, through voting rights or similar rights, to direct the activities of a legal entity that most significantly impact the entity's economic performance. Paragraph [810-10-15-14(b)(1)(i)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14) indicates that, for legal entities other than limited partnerships, investors lack that power through voting rights or similar rights if no owners hold voting rights or similar rights (such as those of a common shareholder in a corporation). ##### [810-10-55-8H](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-8H) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:238735caeeee9c117af91e72923c858163b10747eba78f1663d858e1c2866742 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The shareholders in each series fund lack the ability at a series-specific level to remove and replace the Board of Trustees of the (umbrella) trust, because the shareholders in each series fund are required to vote on an aggregate basis to exercise that right. However, based on an evaluation of the purpose and design of each series fund, the shareholders in each series fund are able to direct the activities of the funds that most significantly impact the funds' economic performance through their voting rights. For example, the activities that most significantly impact the economic performance of Fund A, which include making decisions on how to invest the assets of that fund, are carried out by the asset management company. However, the shareholders of Fund A are able to effectively direct those activities through the voting rights in paragraph [810-10-55-8E(b) through (d)](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-8E). Shareholders of Fund A lack the unilateral ability to remove and replace the Board of Trustees. However, because shareholders have the ability to directly remove and replace the asset management company, approve the compensation of the asset management company, and vote on the investment strategy of Fund A, the investors are deemed to have the power through voting rights to direct the activities of Fund A that most significantly impact the fund's economic performance in accordance with paragraph [810-10-15-14(b)(1)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14). Therefore, assuming none of the other criteria in paragraph [810-10-15-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14) are met for Fund A to be considered a VIE, Fund A would be considered a voting interest entity. ##### [810-10-55-9](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:5f1490a37b12ca2b4f8886d284ba31066d09ea0e9998fde44f2b84e78f969eb9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-17](https://asc.understandingaccounting.org/updates/asu-2018-17/). ##### [810-10-55-10](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:a5feab9ffd68f58274cd11021db62b841b4ef711307457578499cd6dd54ef56f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [810-10-55-11](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:e82dfeb58dd184773f3d73c6aa1bf2b4f8ab922841783f59cd20bfed08db1ff1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [810-10-55-12](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:738301ca4b5eeb16f763049cec9a81d9fd32a7e0e8e9215416ea9c66dc68bf0e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [810-10-55-13](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:4286f8c124bd1d9c47707d4e495676b94c1e776231690a89d85c48dcbae78b85 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [810-10-55-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:c3aa4ba49472f33c647ada0da182dd9bf1785826dcff4ea4238c9731ac6fe123 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [810-10-55-15](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:23e5d898c9864f68ff09e84bb95d89ac9a035e4cad11413752e2f39a3c5b1c88 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [810-10-55-16](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:0ebd18635485d5f4626a6594264cec13bb2fe09dfd537770eccfb123cbf0385b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Variable Interest Entities Subsections provide guidance for identifying entities for which analysis of voting interests, and the holdings of those voting interests, is not effective in determining whether a controlling financial interest exists because the holders of the equity investment at risk do not have sufficient equity at risk for the legal entity to finance its activities without additional subordinated financial support or because they lack any of the following: 1. a The power, through voting rights or similar rights, to direct the activities of a legal entity that most significantly impact the entity's economic performance 2. b The obligation to absorb the expected losses of the legal entity 3. c The right to receive the expected residual returns of the legal entity. Those entities are called [variable interest entities](https://asc.understandingaccounting.org/glossary/v/#variable-interest-entity "A legal entity subject to consolidation according to the provisions of the Variable Interest Entities Subsections of Subtopic 810-10.") (VIEs). The Variable Interest Entities Subsections also provide guidance for determining whether a reporting entity shall consolidate a VIE. A reporting entity that consolidates a VIE is called the [primary beneficiary](https://asc.understandingaccounting.org/glossary/p/#primary-beneficiary "An entity that consolidates a variable interest entity (VIE). See paragraphs 810-10-25-38 through 25-38J for guidance on determining the primary beneficiary.") of that VIE. This Subsection provides guidance for identifying variable interests in a VIE. ##### [810-10-55-17](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:6496767470d4f758e79a04735b1ec8ed510f24e56b6c439d04078fccdc345c65 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The identification of variable interests requires an economic analysis of the rights and obligations of a legal entity's assets, liabilities, equity, and other contracts. Variable interests are contractual, ownership, or other pecuniary interests in a legal entity that change with changes in the [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.") of the legal entity's net assets exclusive of variable interests. The Variable Interest Entities Subsections use the terms [expected losses and expected residual returns](https://asc.understandingaccounting.org/glossary/e/#expected-losses-and-expected-residual-returns "Expected losses and expected residual returns refer to amounts derived from expected cash flows as described in FASB Concepts Statement No. 7, Using Cash Flow Information and Present Value in Accounting Measurements. However, expected losses and expected residual returns refer to amounts discounted and otherwise adjusted for market factors and assumptions rather than to undiscounted cash flow estimates. The definitions of expected losses and expected residual returns specify which amounts are to be considered in determining expected losses and expected residual returns of a variable interest entity (VIE). (P) December 16, 2024; (N) December 16, 2025 105-10-65-9 Expected losses and expected residual returns refer to amounts derived from expected cash flows. However, expected losses and expected residual returns refer to amounts discounted and otherwise adjusted for market factors and assumptions rather than to undiscounted cash flow estimates. The definitions of expected losses and expected residual returns specify which amounts are to be considered in determining expected losses and expected residual returns of a variable interest entity (VIE). A computation of expected losses, expected residual returns, and expected variability is illustrated in paragraphs 810-10-55-42810-10-55-43810-10-55-44810-10-55-45810-10-55-46810-10-55-47810-10-55-48810-10-55-49.") to describe the [expected variability](https://asc.understandingaccounting.org/glossary/e/#expected-variability "Expected variability is the sum of the absolute values of the expected residual return and the expected loss. Expected variability in the fair value of net assets includes expected variability resulting from the operating results of the legal entity.") in the fair value of a legal entity's net assets exclusive of variable interests. ##### [810-10-55-18](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:944f9e5de3861b560477dea3b10e9814bde0b169b6765eb36402a3b3c1593e01 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For a legal entity that is not a VIE (sometimes called a voting interest entity), all of the legal entity's assets, liabilities, and other contracts are deemed to create variability, and the equity investment is deemed to be sufficient to absorb the expected amount of that variability. In contrast, VIEs are designed so that some of the entity's assets, liabilities, and other contracts create variability and some of the entity's assets, liabilities, and other contracts (as well as its equity at risk) absorb or receive that variability. ##### [810-10-55-19](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:d2800f627fffc104207657233ce37f69c185c3f52a277eab3cdba50509ef0518 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The identification of variable interests involves determining which assets, liabilities, or contracts create the legal entity's variability and which assets, liabilities, equity, and other contracts absorb or receive that variability. The latter are the legal entity's variable interests. The labeling of an item as an asset, liability, equity, or as a contractual arrangement does not determine whether that item is a variable interest. It is the role of the item—to absorb or receive the legal entity's variability—that distinguishes a variable interest. That role, in turn, often depends on the design of the legal entity. ##### [810-10-55-20](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-20) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:1e2fa2af3866be771c39b2ddffbe61a15f65b139f39e3f8d85e31fa79b6b6f64 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [810-10-55-16 through 55-41](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-16) describe examples of variable interests in VIEs subject to the Variable Interest Entities Subsections. These paragraphs are not intended to provide a complete list of all possible variable interests. In addition, the descriptions are not intended to be exhaustive of the possible roles, and the possible variability, of the assets, liabilities, equity, and other contracts. Actual instruments may play different roles and be more or less variable than the examples discussed. Finally, these paragraphs do not analyze the relative significance of different variable interests, because the relative significance of a variable interest will be determined by the design of the VIE. The identification and analysis of variable interests must be based on all of the facts and circumstances of each entity. ##### [810-10-55-21](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-21) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:de4fd886928f89ad5e94c3893e49b13825cae6cf22dbefe6e7793197ea406587 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [810-10-55-16 through 55-41](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-16) also do not discuss whether the variable interest is a variable interest in a specified asset of a VIE or in the VIE as a whole. Guidance for making that determination is provided in paragraphs [810-10-25-55 through 25-56](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-55) . Paragraphs [810-10-25-57 through 25-59](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-57) provide guidance for when a VIE shall be separated with each part evaluated to determine if it has a primary beneficiary. ##### [810-10-55-22](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-22) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:f8bdea0e5596398c9053c92069c8894ff29d7336a26a99de55523c53f7845baf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Equity investments in a VIE are variable interests to the extent they are at risk. (Equity investments at risk are described in paragraph [810-10-15-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14).) Some equity investments in a VIE that are determined to be not at risk by the application of that paragraph also may be variable interests if they absorb or receive some of the VIE's variability. If a VIE has a contract with one of its equity investors (including a financial instrument such as a loan receivable), a reporting entity applying this guidance to that VIE shall consider whether that contract causes the equity investor's investment not to be at risk. If the contract with the equity investor represents the only asset of the VIE, that equity investment is not at risk. ##### [810-10-55-23](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-23) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:85382dd7c2d21cd87ff7961116d1c69650bb88efc0275917a88dcaa854c71ffa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Investments in subordinated beneficial interests or subordinated debt instruments issued by a VIE are likely to be variable interests. The most subordinated interest in a VIE will absorb all or part of the expected losses of the VIE. For a voting interest entity the most subordinated interest is the entity's equity; for a VIE it could be debt, beneficial interests, equity, or some other interest. The return to the most subordinated interest usually is a high rate of return (in relation to the interest rate of an instrument with similar terms that would be considered to be investment grade) or some form of participation in residual returns. ##### [810-10-55-24](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-24) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:aa4c42d7dec0156d510ce579c1add5722f9bf3473fb4fc7f6327915de3d3bcdf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Any of a VIE's liabilities may be variable interests because a decrease in the fair value of a VIE's assets could be so great that all of the liabilities would absorb that decrease. However, senior beneficial interests and senior debt instruments with fixed interest rates or other fixed returns normally would absorb little of the VIE's expected variability. By definition, if a senior interest exists, interests subordinated to the senior interests will absorb losses first. The variability of a senior interest with a variable interest rate is usually not caused by changes in the value of the VIE's assets and thus would usually be evaluated in the same way as a fixed-rate senior interest. Senior interests normally are not entitled to any of the residual return. ##### [810-10-55-25](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-25) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:2dc116a92fe33f447df93dc709abaffac33e07d958e9a500bb8ba84bb4bf0b0a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Guarantees of the value of the assets or liabilities of a VIE, written put options on the assets of the VIE, or similar obligations such as some liquidity commitments or agreements (explicit or implicit) to replace impaired assets held by the VIE are variable interests if they protect holders of other interests from suffering losses. To the extent the counterparties of guarantees, written put options, or similar arrangements will be called on to perform in the event expected losses occur, those arrangements are variable interests, including fees or premiums to be paid to those counterparties. The size of the premium or fee required by the counterparty to such an arrangement is one indication of the amount of risk expected to be absorbed by that counterparty. ##### [810-10-55-26](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-26) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:15c9eba321c81134470f44da43b481bb98dc304d72c4a7fdfbcfae66704f2e2d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the VIE is the writer of a guarantee, written put option, or similar arrangement, the items usually would create variability. Thus, those items usually will not be a variable interest of the VIE (but may be a variable interest in the counterparty). ##### [810-10-55-27](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-27) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:325b98823ec95d72e1a7931e2081ad9ed399bb2dcc32af899da1d65660307fa2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Forward contracts to buy assets or to sell assets that are not owned by the VIE at a fixed price will usually expose the VIE to risks that will increase the VIE's expected variability. Thus, most forward contracts to buy assets or to sell assets that are not owned by the VIE are not variable interests in the VIE. ##### [810-10-55-28](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-28) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:08ca1e2ce993eb2695faccc2cdbb61497415fc5f656f9dea25de18d5a0b184de Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A forward contract to sell assets that are owned by the VIE at a fixed price will usually absorb the variability in the fair value of the asset that is the subject of the contract. Thus, most forward contracts to sell assets that are owned by the VIE are variable interests with respect to the related assets. Because forward contracts to sell assets that are owned by the VIE relate to specific assets of the VIE, it will be necessary to apply the guidance in paragraphs [810-10-25-55 through 25-56](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-55) to determine whether a forward contract to sell an asset owned by a VIE is a variable interest in the VIE as opposed to a variable interest in that specific asset. ##### [810-10-55-29](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-29) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:cd359bef11653dff2ffa3c5d45e81244033e8fb56b8d9b36f64265f9863ecd68 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Derivative instruments held or written by a VIE shall be analyzed in terms of their option-like, forward-like, or other variable characteristics. If the instrument creates variability, in the sense that it exposes the VIE to risks that will increase expected variability, the instrument is not a variable interest. If the instrument absorbs or receives variability, in the sense that it reduces the exposure of the VIE to risks that cause variability, the instrument is a variable interest. ##### [810-10-55-30](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-30) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:e5baef87ac1b39bc92969101ef6d23544b437ff5c5e50d1f1a6eed4b45d42e08 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Derivatives, including total return swaps and similar arrangements, can be used to transfer substantially all of the risk or return (or both) related to certain assets of an VIE without actually transferring the assets. Derivative instruments with this characteristic shall be evaluated carefully. ##### [810-10-55-31](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-31) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:1c65a5ee199acbc5460855437d2e5a14a48dfd14d003c4e7bbc7c973605b36e0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some assets and liabilities of a VIE have embedded derivatives. For the purpose of identifying variable interests, an embedded derivative that is clearly and closely related economically to its asset or liability host is not to be evaluated separately. ##### [810-10-55-32](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-32) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:3e80fd73b89073ec7bb45fc2db3674d55444154385f634ec69f80cc1fe266d61 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assets held by a VIE almost always create variability and, thus, are not variable interests. However, as discussed separately in this Subsection, assets of the VIE that take the form of derivatives, guarantees, or other similar contracts may be variable interests. ##### [810-10-55-33](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-33) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:1c6bb34fecdeb2dca5746ecddf09304dfd0161fa3d95b27765fbdcfa5f954440 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). ##### [810-10-55-34](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-34) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:20a47ab8fbb0778cdf6c778043650ba5cac303c3d21d0cd727f23d34b238093f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). ##### [810-10-55-35](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-35) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:0f79032c931dd7f81d1d412a39f46a11d461b1901374c654798da17aaa5c7cc9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). ##### [810-10-55-36](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-36) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:d918305a3b52093705c9ff74a576f60579ab36522bd6979438a0809aa0c2e160 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). ##### [810-10-55-37](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-37) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:5409bcbdf9f4cf2a625e6af2f5dc6dc937d8e3a3a7f43cd383ef21e1da19529f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Fees paid to a legal entity's [decision maker(s)](https://asc.understandingaccounting.org/glossary/d/#decision-maker "An entity or entities with the power to direct the activities of another legal entity that most significantly impact the legal entity's economic performance according to the provisions of the Variable Interest Entities Subsections of Subtopic 810-10.") or service provider(s) are not variable interests if all of the following conditions are met: 1. a The fees are compensation for services provided and are commensurate with the level of effort required to provide those services. 2. b [Subparagraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). 3. c The decision maker or service provider does not hold other interests in the VIE that individually, or in the aggregate, would absorb more than an insignificant amount of the VIE's [expected losses](https://asc.understandingaccounting.org/glossary/e/#expected-losses "A legal entity that has no history of net losses and expects to continue to be profitable in the foreseeable future can be a variable interest entity (VIE). A legal entity that expects to be profitable will have expected losses. A VIE's expected losses are the expected negative variability in the fair value of its net assets exclusive of variable interests and not the anticipated amount or variability of the net income or loss.") or receive more than an insignificant amount of the VIE's [expected residual returns](https://asc.understandingaccounting.org/glossary/e/#expected-residual-returns "A variable interest entity's (VIE's) expected residual returns are the expected positive variability in the fair value of its net assets exclusive of variable interests."). 4. d The service arrangement includes only terms, conditions, or amounts that are customarily present in arrangements for similar services negotiated at arm's length. 5. e [Subparagraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). 6. f [Subparagraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-10-55-37A](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-37A) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:8ee054e7a9eff2ac63a469636b0e70d5af31982faa440c6579125efed8b4babf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-10-55-37B](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-37B) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:abefc2fbbda9ed2e209ba3e8785b958dbcefc490274b6d24540db143a1397f33 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Facts and circumstances should be considered when assessing the conditions in paragraph [810-10-55-37](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-37). An arrangement that is designed in a manner such that the fee is inconsistent with the decision maker's or service provider's role or the type of service would not meet those conditions. To assess whether a fee meets those conditions, a reporting entity may need to analyze similar arrangements among parties outside the relationship being evaluated. However, a fee would not presumptively fail those conditions if similar service arrangements did not exist in the following circumstances: 1. a The fee arrangement relates to a unique or new service. 2. b The fee arrangement reflects a change in what is considered customary for the services. In addition, the magnitude of a fee, in isolation, would not cause an arrangement to fail the conditions. ##### [810-10-55-37C](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-37C) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:ff2fc89e4c599e6b227748d9d9781302be7f11c64f315c7a578b467494a742e6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Fees or payments in connection with agreements that expose a reporting entity (the decision maker or the service provider) to risk of loss in the VIE would not be eligible for the evaluation in paragraph [810-10-55-37](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-37). Those fees include, but are not limited to, the following: 1. a Those related to guarantees of the value of the assets or liabilities of a VIE 2. b Obligations to fund operating losses 3. c Payments associated with written put options on the assets of the VIE 4. d Similar obligations, such as some liquidity commitments or agreements (explicit or implicit) that protect holders of other interests from suffering losses in the VIE. Therefore, those fees should be considered for evaluating the characteristic in paragraph [810-10-25-38A(b)](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A). Examples of those variable interests are discussed in paragraphs [810-10-55-25](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-25) and [810-10-55-29](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-29). ##### [810-10-55-37D](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-37D) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:ec467d591877ef7b3f170f86dcdfcefec929632434e58735fc8e512aeb033dd7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For purposes of evaluating the conditions in paragraph [810-10-55-37](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-37), any variable interest in an entity that is held by a [related party](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.") of the decision maker or service provider should be considered in the analysis. Specifically, a decision maker or service provider should include its direct variable interests in the entity and its indirect variable interests in the entity held through related parties, considered on a proportionate basis. For example, if a decision maker or service provider owns a 20 percent interest in a related party and that related party owns a 40 percent interest in the entity being evaluated, the decision maker's or service provider's interest would be considered equivalent to an 8 percent direct interest in the entity for the purposes of evaluating whether the fees paid to the decision maker(s) or the service provider(s) are not variable interests (assuming that they have no other relationships with the entity). The term _related parties_ in this paragraph refers to all parties as defined in paragraph [810-10-25-43](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-43), with the following exceptions: 1. a An employee of the decision maker or service provider (and its other related parties), except if the employee is used in an effort to circumvent the provisions of the Variable Interest Entities Subsections of this Subtopic. 2. b An employee benefit plan of the decision maker or service provider (and its other related parties), except if the employee benefit plan is used in an effort to circumvent the provisions of the Variable Interest Entities Subsections of this Subtopic. For purposes of evaluating the conditions in paragraph [810-10-55-37](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-37), the quantitative approach described in the definitions of the terms _expected losses_, _expected residual returns_, and _expected variability_ is not required and should not be the sole determinant as to whether a reporting entity meets such conditions. ##### [810-10-55-38](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-38) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:09d2b8a4e7122091747b0df3a4189221e14e1862ed5fe5d8897d1549fe3308e4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Fees paid to decision makers or service providers that do not meet all of the conditions in paragraph [810-10-55-37](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-37) are variable interests. ##### [810-10-55-39](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-39) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:5eda9a9fec413975d1d2f0297bb8bbf747b2c92d990e12ae5e6a7a14b5982bab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Receivables under an operating lease are assets of the lessor entity and provide returns to the lessor entity with respect to the leased property during that portion of the asset's life that is covered by the lease. Most operating leases do not absorb variability in the fair value of a VIE's net assets because they are a component of that variability. Guarantees of the residual values of leased assets (or similar arrangements related to leased assets) and options to acquire leased assets at the end of the lease terms at specified prices may be variable interests in the lessor entity if they meet the conditions described in paragraphs [810-10-25-55 through 25-56](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-55) . Alternatively, such arrangements may be variable interests in portions of a VIE as described in paragraph [810-10-25-57](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-57). The guidance in paragraphs [810-10-55-23 through 55-24](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-23) related to debt instruments applies to creditors of lessor entities. ##### [810-10-55-40](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-40) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:2534e4fdecb29e1a229e6a97cf8e8b0ac91150212e1564ca10a5892154d9f34f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. One VIE is the primary beneficiary of another VIE if it meets the conditions in paragraph [810-10-25-38A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A). A VIE that is the primary beneficiary of a second VIE will consolidate that second VIE. If another reporting entity consolidates the first VIE, that reporting entity's consolidated financial statements include the second VIE because the second VIE had already been consolidated by the first. For example, if Entity A (a VIE) is the primary beneficiary of Entity B (a VIE), Entity A consolidates Entity B. If Entity C is the primary beneficiary of Entity A, Entity C consolidates Entity A, and Entity C's consolidated financial statements include Entity B because Entity A has consolidated Entity B. ##### [810-10-55-41](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-41) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:64ecbec62fe270cc0cb7c76e34179d2e1c6b03ee3b6e8ff58542419ea5fa04b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A transferor's interests in financial assets in a VIE is a variable interest in the transferee entity but it is not a variable interest in a second VIE to which the transferee issues a beneficial interest. The following illustrates this point: 1. a Entity A transfers financial assets to VIE B (a VIE that holds no other assets), retains a subordinated beneficial interest, and reports the transfer as a sale under the provisions of Topic 860. 2. b VIE B issues all of its senior beneficial interests in the transferred assets to VIE C. VIE C issues various types of interests in return for cash and uses the cash to pay VIE B. VIE B uses the cash received from VIE C to pay Entity A. 3. c Entity A's subordinated beneficial interest is a variable interest in VIE B, but neither VIE B nor Entity A has a variable interest in VIE C. #### Illustrations ##### [810-10-55-42](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-42) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:c4f742464c891049eef0ac15bda83aedb3b0c57e6dc236072cade06bad0aeb82 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates a computation of [expected losses](https://asc.understandingaccounting.org/glossary/e/#expected-losses "A legal entity that has no history of net losses and expects to continue to be profitable in the foreseeable future can be a variable interest entity (VIE). A legal entity that expects to be profitable will have expected losses. A VIE's expected losses are the expected negative variability in the fair value of its net assets exclusive of variable interests and not the anticipated amount or variability of the net income or loss."), [expected residual returns](https://asc.understandingaccounting.org/glossary/e/#expected-residual-returns "A variable interest entity's (VIE's) expected residual returns are the expected positive variability in the fair value of its net assets exclusive of variable interests."), and [expected variability](https://asc.understandingaccounting.org/glossary/e/#expected-variability "Expected variability is the sum of the absolute values of the expected residual return and the expected loss. Expected variability in the fair value of net assets includes expected variability resulting from the operating results of the legal entity.") and is intended to explain the meaning of those terms. Entities will not necessarily be able to estimate probabilities to use a precise computation of the type illustrated, but they should use their best efforts to achieve the objective described. This Example is based on a hypothetical pool of financial assets with total contractual cash flows of $1 billion and has the following assumptions: 1. a A single party holds all of the beneficial interests in the VIE, and the VIE has no liabilities. 2. b There is no decision maker because the VIE's activities are completely predetermined. 3. c All cash flows are expected to occur in one year or not to occur at all. 4. d The appropriate discount rate (the interest rate on risk-free investments) is 5 percent. 5. e No other factors affect the fair value of the assets. Thus, the present value of the expected cash flows from the pool of financial assets is assumed to be equal to the fair value of the assets. ##### [810-10-55-43](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-43) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:e4f280b20200d0a37f6cf3412c74e0d818511a900e8404f29fc4c1e91dc08719 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example uses a simple situation intended to illustrate the concepts of expected losses, expected residual returns, and expected variability. Since it is assumed that there is only one party involved, the identity of the primary beneficiary is obvious. ##### [810-10-55-44](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-44) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:425992071c9c9e1b2d6046571a53df78c1847d43415b8c694d5327fe8fa3a2b5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table shows the computation of expected cash flows using the cash flow possibilities that the variable interest holder has identified. The items to be included in expected cash flows of a VIE are described in the definition of the terms [expected losses](https://asc.understandingaccounting.org/glossary/e/#expected-losses "A legal entity that has no history of net losses and expects to continue to be profitable in the foreseeable future can be a variable interest entity (VIE). A legal entity that expects to be profitable will have expected losses. A VIE's expected losses are the expected negative variability in the fair value of its net assets exclusive of variable interests and not the anticipated amount or variability of the net income or loss."), [expected residual returns](https://asc.understandingaccounting.org/glossary/e/#expected-residual-returns "A variable interest entity's (VIE's) expected residual returns are the expected positive variability in the fair value of its net assets exclusive of variable interests."), and [expected variability](https://asc.understandingaccounting.org/glossary/e/#expected-variability "Expected variability is the sum of the absolute values of the expected residual return and the expected loss. Expected variability in the fair value of net assets includes expected variability resulting from the operating results of the legal entity."). - ![](https://asc.understandingaccounting.org/asc-img/GUID-FA87892C-8572-4957-A086-1D130E6F07D7-low.gif) (Amounts in Thousands) Estimated Cash Flows Probability Expected Cash Flows Fair Value " $650,000 " 5.0% " $32,500 " " $30,952 " " 700,000 " 10.0 " 70,000 " " 66,667 " " 750,000 " 25.0 " 187,500 " " 178,571 " " 800,000 " 25.0 " 200,000 " " 190,477 " " 850,000 " 20.0 " 170,000 " " 161,905 " " 900,000 " 15.0 " 135,000 " " 128,571 " 100.0% " $795,000 " " $757,143 " ##### [810-10-55-45](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-45) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:2b7c329ba8e1df295ceb02423f942a316b349a6bf90239d56e4c19cabddf459a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The expected cash flows are $795,000, and the fair value of the pool of assets is $757,143. ##### [810-10-55-46](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-46) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:0302da7f8abf593db51b265f8d1846e11c242ef0dbe5df015bd443fea4450b79 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table shows how expected losses are computed once the expected cash flows are determined. Estimated cash flows (possible outcomes) are compared with the computed expected cash flows (probability-weighted outcomes). Estimated cash flows that are less than the expected cash flows contribute to expected losses, and cash flow possibilities that exceed the expected cash flows contribute to expected residual returns. - ![](https://asc.understandingaccounting.org/asc-img/GUID-F96BA23B-7195-4C13-885E-F4A688240F10-low.gif) (Amounts in Thousands) Estimated Cash Flows (a) Expected Cash Flows Difference Estimated (Losses) Residual Returns Probability Expected Losses Based on Expected Cash Flows Expected Losses Based on Fair Value " $650,000 " " $795,000 " " $(145,000)" 5.0% " $(7,250)" " $(6,905)" " 700,000 " " 795,000 " " (95,000)" 10.0 " (9,500)" " (9,048)" " 750,000 " " 795,000 " " (45,000)" 25.0 " (11,250)" " (10,714)" " 800,000 " " 795,000 " " 5,000 " 25.0 " 850,000 " " 795,000 " " 55,000 " 20.0 " 900,000 " " 795,000 " " 105,000 " 15.0 100.0% " $(28,000)" " $(26,667)" (a) "The computation in this Example uses the probability times the difference between the estimated cash flows and expected cash flows and then discounts the result to arrive at fair value. The same result can be achieved by using the probability times the difference between the present value of the estimated cash flows and the fair value. In situations in which the timing of the cash flows varies, that alternate form may be easier to use." ##### [810-10-55-47](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-47) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:c71feb05dc0d5bcc658bb55179e8d70ce4016d41877121af862b0f79df9bd765 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The term _expected losses_ refers to the expected losses based on fair value (using fair value as the benchmark), which in this Example is $26.667 million. ##### [810-10-55-48](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-48) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:768ff28e4525c555890a19556f1d6487abeb25e0ed7bf36e7fa87008ca1835eb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table shows how expected residual returns are computed for the same pool of assets. - ![](https://asc.understandingaccounting.org/asc-img/GUID-A4A23970-36CB-4AA4-9009-3CAC4997AF76-low.gif) (Amounts in Thousands) Estimated Cash Flows Expected Cash Flows Difference Estimated (Losses) Residual Returns Probability Expected Residual Return Based on Expected Cash Flows Expected Residual Return Based on Fair Value " $650,000 " " $795,000 " " $(145,000)" 5.0% " 700,000 " " 795,000 " " (95,000)" 10.0 " 750,000 " " 795,000 " " (45,000)" 25.0 " 800,000 " " 795,000 " " 5,000 " 25.0 " $1,250 " " $1,191 " " 850,000 " " 795,000 " " 55,000 " 20.0 " 11,000 " " 10,476 " " 900,000 " " 795,000 " " 105,000 " 15.0 " 15,750 " " 15,000 " 100.0% " $28,000 " " $26,667 " ##### [810-10-55-49](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-49) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:1c82a184dffe3b1000b5b88c2b176cd0324353a1fa50bdcf782a2c391d8d18d5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The term _expected residual returns_ refers to the expected residual returns based on fair value (using fair value as the benchmark), which in this Example is $26.667 million. Expected variability is a measure of total variability in either direction. It is the sum of the absolute values of the expected losses and expected residual returns. ##### [810-10-55-50](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-50) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:cad196dc704eef2a8806ffb6eba1ccf36cbeaf2e03a3d6760212731a67f7dc86 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the calculation of expected losses if a legal entity has no history of net losses and expects continued profitability. This Example has the following assumptions: 1. a On January 1, 2004, Entity A is formed to purchase a building, 95 percent of which is financed by debt and 5 percent by equity. The lenders will have recourse only to the building in the event that Entity A does not make the required debt payments. 2. b On the same day, Entity B enters into a five-year-market-rate lease for the building from Entity A that includes a guarantee of a portion of the building's residual value. The sum of the present value of the [lease payments](https://asc.understandingaccounting.org/glossary/l/#lease-payments "See paragraph 842-10-30-5 for what constitutes lease payments from the perspective of a lessee and a lessor.") and the residual value guarantee is less than substantially all the fair value of the building. 3. c There are no other interests in Entity A. 4. d The appropriate discount rate is assumed to be 5 percent. ##### [810-10-55-51](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-51) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:dd0c499f2c297d4c159fbbaf81500f3e48b4e66c7310efed45a15d200bd202c5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The estimated annual outcomes in the Example include both estimated cash flows and the estimated fair value of Entity A's assets to be distributed to variable interest holders in lieu of cash, exclusive of cash flows (or flows of other assets) to and from variable interests. The guarantee is a variable interest in Entity A because it is an interest in assets with a fair value that is more than half of the total fair value of Entity A's assets. Therefore, losses absorbed by the residual value guarantee are losses of Entity A and are included in the outcomes used to calculate expected losses. For calculation simplicity, the estimated outcomes, which include both cash flows and changes in the fair value of Entity A's net assets, and related probabilities are assumed to be the same each year of the five-year lease, and at the end of the lease, the carrying value of the building is assumed to be its fair value. ##### [810-10-55-52](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-52) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:d8cc9ec036cf73a70c8ac706e27783815a94eedaac8abb7c5e510db7b5845ebc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table shows the January 1, 2004, calculation of the expected outcome at the inception of the guarantee identified as a variable interest. The fair value of the expected outcome is assumed to be equal to the sum of the present values of probability-weighted estimated annual outcomes for the five-year lease term, excluding the effects of the residual value guarantee. Any variation in estimated outcomes, as compared to the expected outcome, represents a change to the value of Entity A's net assets exclusive of variable interests from the calculation-date value of those net assets. - ![](https://asc.understandingaccounting.org/asc-img/GUID-524F28B3-077C-4208-8ACA-2DE112BE7900-low.gif) (Amounts in Thousands) Estimated Annual Outcomes (a) Probability Expected Annual Outcome Fair Value of Expected Five-Year Outcomes (b) " $(10,000)" 5.0% $(500) " $(2,165)" " (5,000)" 10.0 (500) " (2,165)" - 20.0 - - " 10,000 " 50.0 " 5,000 " " 21,648 " " 50,000 " 15.0 " 7,500 " " 32,471 " 100.0% " $11,500 " " $49,789 " (a) "Estimated outcomes include both estimated cash flows, exclusive of cash flows (or flows of other assets) to and from variable interests, and the estimated fair value of Entity A's assets to be distributed to variable interest holders in lieu of cash." (b) "The fair value is assumed to be the sum of the present values of the expected outcomes for each year of the five-year period. Because of the simplifying assumption that the annual estimated outcomes and probabilities are the same for each year of the five-year period, the expected annual outcomes are treated as level annuities in the present value calculations to determine the fair value of the five-year expected outcomes." ##### [810-10-55-53](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-53) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:0183460158278c093eb8d49cc76b9e3996a4e3deffcf047e4137ca62e875de1f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table shows the calculation of expected losses as the negative variability from the fair value of the expected outcome. Note that the estimated annual outcomes of $0 and $10,000 contribute to expected losses although neither amount is negative. To the extent that an estimated outcome, although positive, is less than the expected outcome, the legal entity will lose value in relation to its value based on the expected outcome. The following table illustrates the calculation of this expected loss as the fair value of the probability-weighted negative variations from the expected outcome. Expected losses include all such negative variations. - ![](https://asc.understandingaccounting.org/asc-img/GUID-E004E53E-DCBB-495F-850E-ABC7377617E5-low.gif) (Amounts in Thousands) Estimated Annual Outcomes Present Value of Estimated Five-Year Outcomes (a) Fair Value of Expected Five-Year Outcomes (from the table in the preceding paragraph) Positive (Negative) Variation from Expected Value Probability Expected Losses Residual Returns " $(10,000)" " $(43,294)" " $49,789 " " $(93,083)" 5.00% " $(4,654)" " (5,000)" " (21,648)" " 49,789 " " (71,437)" 10.0 " (7,144)" - - " 49,789 " " (49,789)" 20.0 " (9,958)" " 10,000 " " 43,294 " " 49,789 " " (6,495)" 50.0 " (3,247)" " 50,000 " " 216,473 " " 49,789 " " 166,684 " 15.0 - " $25,003 " 100.00% " $(25,003)" " $25,003 " (a) "Because of the simplifying assumption that the annual estimated outcomes are the same for each year of the five-year period, the estimated annual outcomes are treated as level annuities in the calculation of the present value of estimated five-year outcomes." ##### [810-10-55-54](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-54) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:e3f830afefe3c42c64fd7a44724da5bd3ecd1ad931deb912c36041183b81547f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Negative variations can occur without having a net loss reflected in any of the estimated outcomes. Consequently, a profitable VIE will have expected losses, which must be considered in evaluating the sufficiency of equity-at-risk under paragraph [810-10-25-45(c)](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-45). ##### [810-10-55-55](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-55) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:2c047e46038e774272fc985584c807b24da3153a6cd94e199f8793027d081390 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Cases illustrate the application of the guidance in paragraphs [810-10-25-21 through 25-36](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-21) for determining the variability to be considered in the following situations: 1. a Financial VIE primarily financed by fixed-rate debt, holding investments in longer-term fixed-rate debt (Case A) 2. b Financial VIE primarily financed by fixed-rate debt, holding investments in longer-term fixed- and variable-rate debt (with a fixed-rate swap) (Case B) 3. c Financial VIE primarily financed by fixed-rate debt, holding investments in foreign-currency-denominated debt (with a currency swap) (Case C) 4. d Financial VIE primarily financed by floating-rate debt, holding investments in fixed-rate securities (Case D) 5. e Financial VIE financed by credit-linked notes holding highly rated floating-rate investments and a credit default swap (Case E) 6. f Retail-operating VIE (Case F) 7. g Lessor VIE (direct financing lease) with single lessee (operating lease) (Case G) 8. h VIE holding both a fixed-price forward contract to buy and a fixed-price forward contract to sell electricity (Case H). ##### [810-10-55-56](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-56) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:5510422de9e826ba5c1163e8809802d2d1086f55e21c0b930b04a1032fa061c6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Cases A-H share all of the following assumptions: 1. a All the entities are presumed to be VIEs. 2. b All variable interests are variable interests in the VIE (as a whole) rather than variable interests in specified assets of the VIE, based on the guidance in paragraphs [810-10-25-55 through 25-59](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-55) . 3. c A primary beneficiary has not been identified; however, the determination of the primary beneficiary should be made in accordance with the guidance in paragraphs [810-10-25-38A through 25-38G](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A) . ##### [810-10-55-57](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-57) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:3fd20ef0156e80caddc8028aa8a33e749a38dbdd7d0453ba7b5a5c8dd2bf91d3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In each Case, a two-step evaluation is performed as follows: 1. a Step 1: Analyze the nature of the risks in the VIE. 2. b Step 2: Determine the purpose(s) for which the VIE was created and determine the variability the VIE is designed to create and pass along to its interest holders. ##### [810-10-55-58](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-58) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:8e1a70f7569988b78d92d2ef3439b1ba087fb32bf1e148a44de4b33874d3014a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In the diagrams in each Case, creators are on the left and the variable interests are on the right; the instruments that could be considered either creators or absorbers of variability are in the bottom center. ##### [810-10-55-59](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-59) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:f22b5d92713551aec1ec5a4c2350a27086dd228b93664aab24edcd404a032340 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A VIE is created and financed with $96 of 3-year fixed-rate debt and $4 of equity from investors. The VIE uses the proceeds to purchase $100 of B- and BB-rated fixed-rate securities with contractual maturities ranging from 6 to 8 years. At the end of three years, all the investments will be sold with proceeds used, first, to pay the fixed-rate debt holders and, second, to pay the equity holders to the extent proceeds remain. The transaction was marketed to potential debt investors as an investment in a portfolio of below-investment-grade, fixed-rate investments with a longer weighted-average maturity than the liabilities and credit support from the equity tranche. The equity tranche was negotiated to absorb the first dollar risk of loss related to credit risk and interest rate risk and to receive any residual reward from a favorable change in interest rates or credit risk that affects the proceeds received on the sale of the investments in the portfolio. The following diagram illustrates this situation. - ![](https://asc.understandingaccounting.org/asc-img/GUID-A5DC9157-CB4D-446A-BF1D-0BE3003BA83C-low.gif) ##### [810-10-55-60](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-60) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:a2f13043705c2e67365ce7e8428f5bd3f020e2fe09359b7ad24e3699900c162f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The VIE is exposed to the following risks: 1. a Credit risk associated with a possible default by the issuers of the investments in the portfolio with respect to principal and interest payments 2. b Interest rate risk associated with interim changes in the fair value of the fixed-rate periodic interest payments received on the fixed-rate investment portfolio 3. c Interest rate risk associated with changes in cash received upon the sale of fixed-rate investments prior to maturity. ##### [810-10-55-61](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-61) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:0040b775137a2c9508ed2194d3f15c6f7c66503eee7893234a057eb84db473bd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following factors should be considered in the determination of the purpose(s) for which the VIE was created and in the determination of the variability the VIE is designed to create and pass along to its interest holders: 1. a The VIE was marketed to debt investors as a VIE that will be exposed to credit risk and changes in the fair value of the investments over the three-year life of the VIE due to changes in intermediate-term interest rates, with the equity tranche negotiated to absorb the first dollar risk of loss. It has been determined that substantive subordination is present with respect to these risks. 2. b The VIE was not designed to create and pass along to its interest holders interest rate risk associated with interim changes in fair value of the periodic fixed-rate interest payments received on the investments, based on the nature and terms of the debt and equity interests issued by the VIE. Based on this analysis, it can be determined that the VIE was designed to create and pass along the risks in (a) and (c) in the preceding paragraph to the debt and equity investors, which are the VIE's variable interest holders. ##### [810-10-55-62](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-62) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:7299574ec3676aed6d95cffcbcd9c166f9d89af0f5bdc7364a578ece8f29205f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A VIE is created and financed with $96 of 3-year fixed-rate debt and $4 of equity from investors. The VIE uses the proceeds to purchase $40 of B- and BB-rated fixed-rate securities with contractual maturities ranging from 6 to 8 years and $60 of B- and BB-rated floating-rate securities with contractual maturities ranging from 6 to 8 years (average maturity of 7 years). In addition, the VIE enters into a $60 notional 7-year pay floating and receive fixed interest rate swap with a bank. The swap economically converts the $60 of floating-rate investments to fixed-rate investments of the same average maturity. At the end of three years, all the investments will be sold, and the swap settled in cash, with the net proceeds used, first, to pay the fixed-rate debt holders and, second, to pay the equity holders to the extent proceeds remain. Net amounts payable to the swap counterparty periodically and at the end of three years (if required) take priority over payments made to the debt and equity investors. The transaction was marketed to potential debt investors as an investment in a portfolio of below-investment-grade fixed-rate and floating-rate investments (with the floating rate swapped for fixed) with a longer weighted-average maturity (including the effect of the swap) than the liabilities and credit support from the equity tranche. The equity tranche was negotiated to absorb the first dollar risk of loss related to credit risk and interest rate risk, and to receive any residual benefit from a favorable change in interest rates or credit risk that affects the proceeds received on the sale of the investments in the portfolio (including settlement of the swap prior to its contractual maturity). The following diagram illustrates this situation. - ![](https://asc.understandingaccounting.org/asc-img/GUID-E12A549E-FD43-4A50-A083-23CF036316B0-low.gif) ##### [810-10-55-63](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-63) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:99ce2aef0bba9717fafb4e1e3fb1c472b563a3190cc3a7c332ad8782fe391c22 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The VIE is exposed to the following risks: 1. a Credit risk associated with a possible default by the issuers of the investments in the portfolio with respect to principal or interest payments 2. b Credit risk associated with a possible default by the swap counterparty with respect to interest payments and the settlement amount, if any, due to the VIE at the end of three years 3. c Interest rate risk associated with changes in the fair value of the fixed-rate periodic interest payments received on the fixed-rate investment portfolio and on the fixed leg of the swap 4. d Interest rate risk associated with changes in the periodic interest payments received on the floating-rate investment portfolio 5. e Interest rate risk associated with changes in cash received upon the sale of fixed-rate investments before maturity 6. f Interest rate risk associated with the amount received or paid upon settlement of the swap at the end of three years. ##### [810-10-55-64](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-64) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:9379dd949e49240d7774c0bdbd64ddfbab314bdce003fde6426472068f3dbff2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following factors should be considered in the determination of the purpose(s) for which the VIE was created and in the determination of the variability the VIE is designed to create and pass along to its interest holders: 1. a The VIE was marketed to debt investors as a VIE that will be exposed to credit risk and changes in the fair value of a portfolio of intermediate-term fixed-rate investments (including floating-rate investments effectively converted to fixed-rate investments by the swap) over the three-year life of the VIE due to changes in intermediate-term interest rates, with the equity tranche negotiated to absorb the first dollar risk of loss. It has been determined that substantive subordination is present with respect to these risks. 2. b The swap counterparty is senior to the debt and equity investors, and the debt and equity investors understand that they are also exposed to the credit risk from possible default by the swap counterparty to the extent the swap is an asset to the VIE. 3. c The interest rate swap is strongly indicated as a creator of variability because its underlying is based on observable market rates and it is senior in priority to other interest holders. Although the notional amount of the swap relates to a majority of the assets of the VIE, changes in the cash flows or fair value of the swap are not expected to offset all, or essentially all, of the risk or return (or both) related to those investments because the fair value and cash flows of the VIE's investments are expected to be affected by risk factors other than changes in market interest rates (that is, credit risk). 4. d The VIE was not designed to create and pass along to its interest holders interest rate risk associated with changes in the fair value of the fixed-rate periodic interest payments received on the fixed-rate investment portfolio and on the fixed leg of the swap, based on the nature and terms of the other contracts the VIE has entered into. 5. e The VIE was not designed to create and pass along to its interest holders interest rate risk associated with changes in the periodic interest payments received on the floating-rate investment portfolio, based on the nature and terms of the debt and equity interests issued by the VIE. Based on this analysis, it can be determined that the VIE was designed to create and pass along the risks in (a), (b), (e), and (f) in the preceding paragraph to the debt and equity investors, which are the VIE's variable interest holders. The interest rate swap is considered a creator of the VIE's variability based on the design of the VIE and the guidance in paragraphs [810-10-25-35 through 25-36](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-35) . ##### [810-10-55-65](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-65) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:6fd4ec08571b1fc9ed661295f292d997db39fcd1720051b28ea62412bf8104c7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A VIE is created and financed with $96 of 5-year fixed-rate debt and $4 of equity from investors. The VIE uses the proceeds to purchase $100 of B- and BB-rated fixed-rate securities denominated in Japanese Yen (JPY) with contractual maturities of 5 years. In addition, the VIE enters into a $100 notional 5-year pay-fixed JPY and receive-fixed U.S. dollars (USD) cross-currency swap with a bank. The swap economically converts the fixed-rate JPY-denominated investments to fixed-rate USD investments, effectively offsetting the foreign exchange risk from both periodic interest payments and the amount due upon maturity for the JPY-denominated investments. At the end of five years, all the investments will mature and a final settlement will be paid or received by the VIE on the swap, with the net proceeds used, first, to pay the fixed-rate debt holders and, second, to pay the equity holders to the extent proceeds remain. The transaction was marketed to debt investors as an investment in a portfolio of below-investment-grade, JPY fixed-rate investments (with a third-party swap designed to offset the JPY exchange risk associated with interest and principal repayment on the investments) and credit support from the equity tranche. The equity tranche was negotiated to absorb the first dollar risk of loss. The following diagram illustrates this situation. - ![](https://asc.understandingaccounting.org/asc-img/GUID-F4FD4A1B-516B-47B6-B956-3BCE51EE94D8-low.gif) ##### [810-10-55-66](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-66) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:27206fc412de5735774b331941520f8ea9d447f54524585d0cc408a1317cfa89 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The VIE is exposed to the following risks: 1. a Credit risk associated with a possible default by the issuers of the investments in the portfolio with respect to principal and interest payments 2. b Credit risk associated with a possible default by the cross-currency swap counterparty with respect to interest payments and the settlement amount, if any, due to the VIE at the end of five years 3. c Interest rate risk associated with changes in the fair value of the fixed-rate periodic interest payments received on the fixed-rate investment portfolio and on the receive leg of the cross-currency swap 4. d Foreign currency exchange risk associated with the periodic interest payments received on the fixed-rate JPY-denominated investments and the final receipt of principal at maturity 5. e Foreign currency exchange risk associated with the periodic interest payments or receipts and the amount received or paid upon final settlement of the cross-currency swap at the end of five years. ##### [810-10-55-67](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-67) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:c9f54d1ca6794872a7cad3ebba172159489958d852b42d80294b7feff04f2ab0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following factors should be considered in the determination of the purpose(s) for which the VIE was created and in the determination of the variability the VIE is designed to create and pass along to its interest holders: 1. a The VIE was marketed to debt investors as a VIE that will be exposed to credit risk from possible default by the issuers of the JPY-denominated investments (principal and interest) as well as credit risk from possible default by the cross-currency swap counterparty, with the equity tranche negotiated to absorb the first dollar risk of loss related to these risks. It has been determined that substantive subordination is present with respect to these risks. 2. b The VIE was created to provide an investment vehicle for debt and equity investors to be exposed to the credit risk of entities whose securities are denominated in JPY. 3. c The swap counterparty is senior to the debt and equity investors, and the debt and equity investors are also exposed to the credit risk from possible default by the swap counterparty to the extent the swap is an asset to the VIE. 4. d The currency swap is strongly indicated as a creator of variability because its underlying is based on observable market rates and it is senior in priority to other interest holders. Although the notional amount of the swap relates to a majority of the assets of the VIE, changes in the cash flows or fair value of the swap are not expected to offset all, or essentially all, of the risk or return (or both) related to those investments because the fair value and cash flows of the VIE's investments are expected to be affected by risk factors other than changes in foreign currency exchange rates (that is, credit risk). 5. e The VIE was not designed to create and pass along to its interest holders interest rate risk associated with changes in the fair value of the fixed-rate periodic interest payments received on the fixed-rate investment portfolio and on the receive leg of the cross-currency swap, based on the nature and terms of the debt and equity contracts issued by the VIE. Based on this analysis, it can be determined that the VIE was designed to create the risks in (a), (b), (d), and (e) in the preceding paragraph, and pass along the risks in (a) and (b) in the preceding paragraph to the debt and equity investors, which are the VIE's variable interest holders. The cross-currency swap is considered a creator of the VIE's variability based on the design of the VIE and the guidance in paragraphs [810-10-25-35 through 25-36](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-35) . ##### [810-10-55-68](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-68) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:960922cca6ee503306c6cdfebc25b5a929a9e476c903f013311faa8d4271ede6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A VIE is created and financed with $90 of 3-year floating-rate debt and $10 of equity from investors. The VIE uses the proceeds to purchase $100 of AAA-rated fixed-rate securities, which mature in 3 years. The fixed periodic interest payments received on the investments are used to pay the floating-rate interest to the debt holders with the remainder used to provide a return to the equity investor. At the end of three years, all the investments will mature with proceeds used, first, to pay the floating-rate debt holders and, second, to pay the equity holder to the extent proceeds remain. The VIE is not actively managed. The transaction was marketed to potential debt investors as an investment in a portfolio of high-quality fixed-rate investments with the equity tranche negotiated to provide support in the event of a credit default on the investments or in the event the fixed-rate return on the investments is not sufficient to pay the floating-rate coupon on the debt. The equity tranche was negotiated to absorb the first dollar risk of loss. The following diagram illustrates this situation. - ![](https://asc.understandingaccounting.org/asc-img/GUID-4C5CCF2E-C712-49A3-88C7-0BEEC814D32A-low.gif) ##### [810-10-55-69](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-69) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:ef99bb1ac431c4d6620c7307106179fabf5e027c05662abf322bf97f4f1e1f68 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The VIE is exposed to the following risks: 1. a Credit risk associated with a possible default by the issuers of the investments in the portfolio with respect to principal or interest payments 2. b Interest rate risk associated with changes in the fair value of the fixed-rate periodic interest payments received on the fixed-rate investment portfolio. ##### [810-10-55-70](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-70) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:ff9eafdd3a8f7a4be5e1b84274e258b204558ae58c090335e2d4cc55e5638f69 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following factors should be considered in the determination of the purpose(s) for which the VIE was created and in the determination of the variability the VIE is designed to create and pass along to its interest holders: 1. a The VIE was marketed to debt investors as an entity that will be exposed to changes in the fair value of periodic interest payments received on the investments due to changes in interest rates and credit risk associated with the investment portfolio, with the equity tranche negotiated to absorb the first dollar risk of loss. It has been determined that substantive subordination is present with respect to these risks. 2. b The equity investor has implicitly issued a $90 notional interest rate swap to the VIE in which that investor agrees to pay the VIE a floating rate and receive a fixed rate. However, the maximum amount payable to the VIE is limited to the equity investment. The debt holders will absorb the remaining variability caused by changes in interest rates. 3. c The VIE was created to provide an investment vehicle for debt and equity investors to be exposed to the credit risk and interest rate risk associated with a mismatch between the assets (fixed-rate) and liabilities (floating-rate). 4. d The VIE was designed to create and pass along to its interest holders interest rate risk associated with changes in fair value of the periodic fixed-rate interest payments received on the investments, based on the nature and terms of debt and equity interests issued by the VIE. Based on this analysis, it can be determined that the VIE was designed to create and pass along the risks in (a) and (b) in the preceding paragraph to the debt and equity investors, which are the VIE's variable interest holders. ##### [810-10-55-71](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-71) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:7c0881db09430d7a47945c1eeecb2a3ed60677c4aaaec129c8e9b5e7acfabe58 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Bank A holds a $100 investment in bonds issued by ABC Entity and enters into a credit default swap with a newly established VIE that has no equity investors and no decision-making ability. The VIE issues $100 of credit-linked notes to investors. The credit-linked notes pay a return equal to the London Interbank Offered Rate (LIBOR) + 90 basis points and mature in 5 years. The proceeds from the issuance of the credit-linked notes are invested in floating-rate AAA-rated investments. The terms of the credit default swap require Bank A to pay quarterly a swap premium of 100 basis points to the VIE. If a credit event occurs, as defined in the agreement, the VIE pays Bank A the notional amount of $100, and receives from Bank A the bonds issued by ABC Entity. The VIE then settles its five-year notes by delivering to the note holder the defaulted ABC Entity bonds or by selling the bonds and delivering cash. ##### [810-10-55-72](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-72) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:f8d25d51f4f74db7b001d51eadd2af7881244be260804e2746bcb3d05cd0784b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The coupon on the floating-rate AAA-rated investments, plus the premium received on the credit default swap, will fund the coupon payment on the credit-linked notes. The VIE was marketed to potential investors as a floating-rate investment with an enhanced yield due to the assumption of credit risk of the referenced entity (in this case, ABC Entity). The following diagram illustrates this situation. - ![](https://asc.understandingaccounting.org/asc-img/GUID-F5BA6A1A-F4E2-415A-992E-AB31DE3D4F05-low.gif) ##### [810-10-55-73](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-73) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:b6d139ca216fc003ee1c1428904a4b603dd388b4a7d02ff50bbce36c913686b5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The VIE is exposed to the following risks: 1. a Credit risk associated with ABC Entity 2. b Credit risk associated with the AAA-rated investments 3. c Credit risk associated with possible default by Bank A with respect to premium payments made to the VIE 4. d Interest rate risk associated with changes in the cash flows from the interest payments received on the floating-rate investments. ##### [810-10-55-74](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-74) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:754bc531191921eadd8514779c7bb9ae79e479f8d751e82cf869b80c0d44e627 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following factors should be considered in the determination of the purpose(s) for which the VIE was created and in the determination of the variability the VIE is designed to create and pass along to its interest holders: 1. a The VIE was marketed to the note holders as a VIE that will be exposed to credit risk associated with ABC Entity through the credit default swap, with a small amount of credit risk from Bank A, because the notes, if there is no credit event that triggers settlement of the credit default swap, are fully collateralized by AAA-rated investments. 2. b The VIE has sold credit protection on ABC Entity to Bank A and has purchased credit protection on ABC Entity from the note holders, who are expected to receive an enhanced return over the AAA floating rate investment for assuming the credit risk of ABC Entity and (to a lesser extent) the credit risk of Bank A. 3. c The written credit default swap is strongly indicated as a creator of variability because its underlying is based on observable market variables and it is senior in priority to other interest holders. 4. d The VIE was not designed to create and pass along to its interest holders interest rate risk associated with changes in cash flows from the periodic interest payments received on the floating-rate investments, based on the nature and terms of the credit-linked notes issued by the VIE. Based on this analysis, it can be determined that the VIE was designed to create and pass along the risks in (a), (b), and (c) in the preceding paragraph to the note holders, which are the VIE's variable interest holders. The written credit default swap is considered a creator of the VIE's variability based on the design of the VIE and considering the guidance in paragraphs [810-10-25-35 through 25-36](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-35) . ##### [810-10-55-75](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-75) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:941cc0e3b5a35a78f291f8319317f157fff9bae38a0d44b8d23de6d9a7357e01 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A VIE is created by a furniture manufacturer and a strategic investor to sell wood furniture to retail customers in a particular geographic region of the country that has no viable distribution channel. The VIE is established with $100 of equity contributed by the furniture manufacturer and $3 million of 10-year fixed-rate debt financed by the strategic investor. Interest is paid to the fixed-rate debt holder from operations before funds are available to the equity holder. The furniture manufacturer has guaranteed the fixed-rate debt to the strategic investor. The following diagram illustrates this situation. - ![](https://asc.understandingaccounting.org/asc-img/GUID-DFD1149C-1089-4768-8589-A373E50D0B8A-low.gif) ##### [810-10-55-76](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-76) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:540a3177dd347d956144e38c8ebfec77a5ef609a6c54874e5e9d5f48201c4e2a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The VIE is exposed to the following risks (collectively, operating risks): 1. a Sales volume risk 2. b Retail furniture price risk 3. c Inventory price risk 4. d Other operating cost risk. ##### [810-10-55-77](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-77) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:739b80a7d893fdde6c5fc95f398b757676afb46182b0c52cdd6177a0f2540df2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following factors should be considered in the determination of the purpose(s) for which the VIE was created and in the determination of the variability the VIE is designed to create and pass along to its interest holders: 1. a The VIE was created to enable the furniture manufacturer to extend its existing business line into a particular geographic region that lacked a viable distribution channel. 2. b The furniture manufacturer is absorbing variability from the operations of the VIE through its guarantee of the debt. 3. c The debt interest was negotiated as a fixed-rate investment in a retail operating VIE, supported by the furniture manufacturer. Based on this analysis, it can be determined that the VIE was designed to create and pass along the risks in (a), (b), (c), and (d) in the preceding paragraph to the debt and equity investors (the strategic investor and furniture manufacturer, respectively), which are the VIE's variable interest holders. The furniture manufacturer also holds a variable interest with respect to its guarantee of the debt of the VIE because that contract, by design, absorbs a portion of the VIE's variability due to operating risks. ##### [810-10-55-78](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-78) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:286966af4cf67038456d08ce04705abd6e80479fe6a05673837ac9f97548fccf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A VIE is created and financed with $950 of 5-year fixed-rate debt and $50 of equity. The VIE uses the proceeds from the issuance to purchase an [underlying asset](https://asc.understandingaccounting.org/glossary/u/#underlying-asset "An asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset.") to be leased to a [lessee](https://asc.understandingaccounting.org/glossary/l/#lessee "An entity that enters into a contract to obtain the right to use an underlying asset for a period of time in exchange for consideration.") with a AA credit rating. The equity provides protection (up to $50) to the debt related to both credit risk and interest rate risk because the debt is paid before any cash flows are available to the equity investors. The [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.") has a five-year term and is classified as a [direct financing lease](https://asc.understandingaccounting.org/glossary/d/#direct-financing-lease "From the perspective of a lessor, a lease that meets none of the criteria in paragraph 842-10-25-2 but meets the criteria in paragraph 842-10-25-3(b)and is not an operating lease in accordance with paragraph 842-10-25-3A.") by the [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.") and as an [operating lease](https://asc.understandingaccounting.org/glossary/o/#operating-lease "From the perspective of a lessee, any lease other than a finance lease. From the perspective of a lessor, any lease other than a sales-type lease or a direct financing lease.") by the lessee. The lessee is required to provide a first-loss residual value guarantee for the expected future value of the underlying asset at the end of five years, and it has a fixed-price purchase option to acquire the underlying asset for the same amount. A third-party residual value guarantor provides a very small additional residual value guarantee to the lessor. The governing documents for the VIE do not permit the VIE to buy additional assets or sell existing assets during the five-year holding period. The VIE was formed so that the lessee will have rights to occupy and use the underlying asset under an operating lease and retain substantially all of the risks and rewards from appreciation or depreciation in value of the underlying asset. The transaction was marketed to potential investors as an investment in a portfolio of AA-rated assets collateralized by an underlying asset that would provide a fixed-rate return to debt holders equivalent to AA-rated assets. The return to equity investors is expected to be slightly greater than the return provided to the debt investors because the equity is subordinated with respect to the obligation of the lessee to the VIE. - ![](https://asc.understandingaccounting.org/asc-img/GUID-CF024729-CD77-4F90-A6B0-B6724BE7E3BD-low.gif) ##### [810-10-55-79](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-79) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:78ed7d846eb61d9c0ba5cac83ff5ef038dc4d718f8a6a5bb0ce6cd8fb88849db Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The VIE is exposed to the following risks: 1. a Price risk with respect to changes in fair value of the underlying asset 2. b Credit risk associated with possible default by the lessee of the underlying asset with respect to the lease payments 3. c Interest rate risk associated with changes in the fair value of the future lease payments. ##### [810-10-55-80](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-80) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:cd0fc72d66d88b2d2379b6e1d75c6fb84a0432ca6cbc60ef15d73722289a75e4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following factors should be considered in the determination of the purpose(s) for which the VIE was created and in the determination of the variability the VIE is designed to create and pass along to its interest holders: 1. a Although the lease payments are fixed, the VIE was not designed to be exposed to interim changes in fair value of those lease payments due to interest rate risk because the VIE is not expected to sell the underlying asset before maturity of the fixed-rate debt. 2. b The primary purpose for which the VIE was created was to provide the lessee with use of the underlying asset for five years with substantially all of the rights and obligations of ownership. 3. c The residual value guarantee effectively transfers substantially all of the risk associated with the underlying asset (that is, declines in value) to the lessee. Therefore, the variability that is transferred to that interest holder is strongly indicated as variability that the VIE is designed to create and pass along to its interest holders. 4. d The fixed-price purchase option effectively transfers substantially all of the rewards from the underlying asset (that is, increases in value) to the lessee. 5. e The VIE is designed to be exposed to the risks associated with a cumulative change in fair value of the underlying asset at the end of five years as well as credit risk from possible default by the lessee with regard to lease payments. 6. f The VIE was marketed to potential investors as an investment in a portfolio of AA-rated assets collateralized by an underlying asset that would provide a fixed-rate return to debt holders equivalent to AA-rated assets. 7. g The role of the residual value guarantee and fixed-price purchase option in the design of the VIE, regardless of their legal form or accounting classification, dictates whether those interests shall be treated as creating risk for the VIE or absorbing risk from the VIE. Therefore, price risk with respect to changes in fair value of the underlying asset is a relevant risk for the VIE, even though the lessor VIE records a net investment in the direct financing lease, rather than the underlying asset itself, on its balance sheet for accounting purposes. Based on this analysis, it can be determined that the VIE was designed to create and pass along the risk in (a) in paragraph [810-10-55-79](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-79) to the third-party guarantor and the lessee (with respect to the residual value guarantee and fixed-price purchase option) and the risk in (b) in paragraph 810-10-55-79 to the note and equity holders, all of which are the VIE's variable interest holders. ##### [810-10-55-81](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-81) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:f4b0ee087023f93931dc6df56ddac3ef491f764b8322bf1b63ac200609349e31 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A financially distressed electricity producer wishes to monetize some of its in-the-money forward positions. One such contract is a physically settled forward contract to sell electricity to Party A at a fixed price one year in the future. A VIE is created and financed with $100 of 1-year fixed-rate debt from investors for the purpose of monetizing the value of the forward contract to sell for the electricity producer. The VIE uses the proceeds from issuance to purchase the physically settled forward contract to sell (from the VIE's perspective) electricity to Party A at a fixed price one year in the future. This contract is in-the-money by $100. After the electricity producer has received its $100, it has no further involvement with the VIE. The VIE enters into a separate at-market forward contract to buy (from the VIE's perspective) electricity at a lower fixed price from Party B on the same future date. Both forward contracts will be physically settled, and all other critical terms (except the fixed settlement price) of the two forward contracts are the same. Both forward contracts have rights senior to those of the investors and are derivatives whose underlying is a market observable price. The VIE is not actively managed. The debt was marketed to the investors as a fixed-rate one-year investment with an enhanced yield due to risk of possible default by either Party A or Party B with respect to their forward contracts with the VIE. The following diagram illustrates this situation. - ![](https://asc.understandingaccounting.org/asc-img/GUID-5995C71E-D218-4173-B568-BA3C2F1F1FEF-low.gif) ##### [810-10-55-82](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-82) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:4fa1b32ef0fba4a4cc6460d605afaaef1134c5fb09d63dc27a6ff9956b3dc898 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The VIE is exposed to the following risks: 1. a Electricity price risk, which affects the fair values of the fixed-price forward purchase contract and the fixed-price forward sales contract 2. b Credit risk associated with possible default by the counterparty to the forward purchase contract 3. c Credit risk associated with possible default by the counterparty to the forward sales contract. ##### [810-10-55-83](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-83) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:67fe7574553300bea81d7c4438c57e165538c2d1f8577b6fd7d908b3ea223c8a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following factors should be considered in the determination of the purpose(s) for which the VIE was created and in the determination of the variability the VIE is designed to create and pass along to its interest holders: 1. a The VIE was designed to hold offsetting positions with respect to electricity price risk through a forward purchase contract and a forward sales contract with terms that are the same (except for fixed settlement price). 2. b The debt was marketed to the investors as a fixed-rate one-year investment with an enhanced yield due to risk of possible default by either Party A or Party B with respect to their forward contracts with the VIE. 3. c To the extent electricity prices rise and the forward purchase contract (with Party B) increases in value (from the VIE's perspective), the debt investors will be exposed to credit risk to the extent that Party B defaults on its obligation. 4. d To the extent electricity prices drop and the forward sales contract increases in value (from the VIE's perspective), the debt investors will be exposed to credit risk to the extent that Party A defaults on its obligation. 5. e The forward to buy electricity at a fixed price is strongly indicated as a creator of variability because its underlying is based on observable market prices and it is senior in priority to the debt holders. 6. f The forward to sell electricity at a fixed price is strongly indicated as a creator of variability because its underlying is based on observable market prices and is senior in priority to the debt holders. 7. g Changes in fair value of each forward contract are expected to offset all, or essentially all, of the risk and return related to the other forward contract, so a further analysis of the design of the VIE is necessary in order to conclude whether each forward contract is a creator of variability or a variable interest. ##### [810-10-55-84](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-84) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:22b58e3544d576f35c80d15ea3e935e6f6d01481923e6c6622c8923afea52d05 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A further analysis of the design of the VIE is necessary to conclude whether each fixed-price forward contract is a creator of variability or a variable interest because changes in the fair value of each contract are expected to offset all, or essentially all, of the risk and return related to the other contract. That analysis should consider the following factors: 1. a The debt interests in this VIE were marketed on behalf of the electricity producer as fixed-rate debt exposed to the credit risk of the counterparties to the forward agreements. 2. b The counterparties to the forward agreements did not participate significantly in the design of the VIE. ##### [810-10-55-85](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-85) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:6cf99e1df5909d4521367aec37ab80bda60c434a0bc2c200c59c6bff8f991cb4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In these circumstances, because they meet the characteristics described in paragraph [810-10-25-35(a) through (b)](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-35) and based on the further analysis of the design of the VIE, the two forward contracts are creators of the VIE's variability. Based on this analysis, it can be determined that the VIE was designed to create and pass along the risks in paragraph [810-10-55-82(a) through (c)](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-82) to the debt investors, which are the VIE's variable interest holders. ##### [810-10-55-86](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-86) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:4c782ead59da525bd55ee994a2c9ba61dd56651bfc4ece44d76aee757e61e4b0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If, instead of executing the transaction described in this Case, the electricity producer sold the fixed-price forward sales contract for $100 to an entity that physically owned a power plant and produced electricity, an analysis of the design of that entity would be required, which would involve developing a complete understanding of the purpose for which that entity was created. In this case, the electricity producer also has no further involvement with the entity after receiving its $100. Provided the fixed-priced forward contract to sell is senior in priority to other interest holders, that contract would be strongly indicated as a creator of variability because its underlying is based on observable market rates. In addition, changes in the cash flows or fair value of the fixed-price forward contract typically would not be expected to offset all, or essentially all, of the risk or return (or both) related to the power plant because the risk or return (or both) of the power plant would be affected by factors other than changes in electricity prices (for example, operating costs). ##### [810-10-55-87](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-87) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:9a21521fb7380ffed37eebfbd43249233f0f5ce4d8d59dd5e9f5feb444163d74 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-07](https://asc.understandingaccounting.org/updates/asu-2014-07/). ##### [810-10-55-88](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-88) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:59a352245dba1ba2d3d6f1f1cf73b0b12d23df9bf109f588d57e058168410a1f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-07](https://asc.understandingaccounting.org/updates/asu-2014-07/). ##### [810-10-55-89](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-89) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:b631ae37c0a2513347f8d6f7203c6ecaf50f255a58387210eaa487220a5c4c6d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-07](https://asc.understandingaccounting.org/updates/asu-2014-07/). ##### [810-10-55-90](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-90) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:618c161d1da911d550357dc3238068824ef2caa8d4e3ea5a0a897e00bc2b8cbe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph moved to [810-10-55-206](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-206). ##### [810-10-55-90A](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-90A) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:3a0021de19ba8b20ca388563b782813e0fa437940e64c5dea48e51280a490761 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph moved to [810-10-55-207](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-207). ##### [810-10-55-91](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-91) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:8a4fa21f02a0e0e4278c19f504229623e11beaaf58a8c5eb95c464b31000ccef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph moved to [810-10-55-208](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-208). ##### [810-10-55-92](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-92) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:42f51c967a871e0a4c0610a3732920f5e0471b6b22ea8591932c174895ff598f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph moved to [810-10-55-209](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-209). ##### [810-10-55-93](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-93) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:67325ce1a9e5e975625ac03d5cc8620e3c66e2377492d7e1905f8241c0654311 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following cases are provided solely to illustrate the application of the guidance in paragraphs [810-10-25-38A through 25-38J](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A) related to the identification of a primary beneficiary: 1. a Commercial mortgage-backed securitization (Case A) 2. b Asset-backed collateralized debt obligation (Case B) 3. c Structured investment vehicle (Case C) 4. d Commercial paper conduit (Case D) 5. e Guaranteed mortgage-backed securitization (Case E) 6. f Residential mortgage-backed securitization (Case F) 7. g Lease entity (Case G) 8. h Collaboration—Joint venture arrangement (Case H) 9. i Furniture manufacturing entity (Case I) 10. j Investment fund 1—Annual and performance-based fees and additional interests (Case J) 11. k Investment fund 2—Annual and performance-based fees and no additional interests (Case K) 12. l eCommerce Entity (Case L). ##### [810-10-55-94](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-94) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:4574482cf0551967a1700ba2d34bc6f58ac466dd89bf9b6345abc5a42aa19998 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The identification of a primary beneficiary, if any, in Cases A-L is based solely on the specific facts and circumstances presented. These Cases are hypothetical and are not meant to represent actual transactions in the marketplace. Although certain aspects of the Cases may be present in actual fact patterns, relevant facts and circumstances of a specific fact pattern or structure would need to be evaluated to reach an accounting conclusion. The Cases share the following assumptions: 1. a The legal entities in Cases A-I and Case L are presumed to be VIEs.These presumptions should be understood as fact and not as conclusions based on the other facts and circumstances in each case. Case J provides an explanation as to why the legal entity is a VIE. Case K does not indicate whether the legal entity is a VIE because the decision maker does not have a variable interest in the legal entity. 2. b All variable interests are presumed to be variable interests in the VIE as a whole, rather than variable interests in specified assets of the VIE, on the basis of the guidance in paragraphs [810-10-25-55 through 25-59](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-55) . ##### [810-10-55-95](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-95) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:3ea4c6a8b6eb70279045f22a6b8fe7026c8949a0639020c3f3b7a976d3e6f0da Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In some Cases, certain fees are described as representing, or not representing, a variable interest on the basis of paragraphs [810-10-55-37 through 55-38](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-37) . However, the Cases were not meant to illustrate the application of the guidance in those paragraphs, and additional facts would be necessary to determine which condition(s) resulted in the fee representing a variable interest. Specifically, certain Cases state whether certain fees are commensurate with the level of effort required to provide the related services and whether they are part of a service arrangement that includes only terms, conditions, or amounts that are customarily present in similar arrangements negotiated at arm's length. Those presumptions should be understood as fact for purposes of reading each related Case and not as conclusions based on the other facts and circumstances described in each case. Finally, determining the primary beneficiary in accordance with the guidance in the Variable Interest Entities Subsections requires judgment and is on the basis of individual facts and circumstances of the VIE and the reporting entity with the variable interest or interests. ##### [810-10-55-96](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-96) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:78380613c0577c172da7cbba7e028786df2498830b488656a481c61995a4aad0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A VIE is created and financed with $94 of investment grade 7-year fixed-rate bonds (issued in 3 tranches) and $6 of equity. All of the bonds are held by third-party investors. The equity is held by a third party, who is also the special servicer. The equity tranche was designed to absorb the first dollar risk of loss and to receive any residual return from the VIE. The VIE uses the proceeds to purchase $100 of BB-rated fixed-rate commercial mortgage loans with contractual maturities of 7 years from a transferor. The commercial mortgage loans contain provisions that require each borrower to pay the full scheduled interest and principal if the loan is extinguished prior to maturity. The transaction was marketed to potential bondholders as an investment in a portfolio of commercial mortgage loans with exposure to the credit risk associated with the possible default by the borrowers. ##### [810-10-55-97](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-97) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:7ff17283d106f3adf5c94bd1bb426138225a42a122126f0d812e1b50e6edc6cb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Each month, interest received from all of the pooled loans is paid to the investors in the fixed-rate bonds, in order of seniority, until all accrued interest on those bonds is paid. The same distribution occurs when principal payments are received. ##### [810-10-55-98](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-98) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:3e9fc59947076639cf95320e6666aaf7d563d35e90a6a05a2d49d9505553cf2e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If there is a shortfall in contractual payments from the borrowers or if the loan collateral is liquidated and does not generate sufficient proceeds to meet payments on all bond classes, the equity tranche and then the most subordinate bond class will incur losses, with further losses impacting more senior bond classes in reverse order of priority. ##### [810-10-55-99](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-99) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:bf9569a281e0845418ba1af4c2c02fe3bdfcd111052c69c9f22ba05fb77d2125 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The transferor retains the primary servicing responsibilities. The primary servicing activities performed are administrative in nature and include remittance of payments on the loans, administration of escrow accounts, and collections of insurance claims. Upon delinquency or default by the borrower, the responsibility for administration of the loan is transferred from the transferor as the primary servicer to the special servicer. Furthermore, the special servicer, as the equity holder, has the approval rights for budgets, leases, and property managers of foreclosed properties. ##### [810-10-55-100](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-100) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:c5c440531bdd20100ee4030af59c9d504b3d556bc083bb356c25a7baf670dcca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The special servicer is involved in the creation of the VIE and required at the creation date that certain loans, which it deemed to be of high risk, be removed from the initial pool of loans that were going to be purchased by the VIE from the transferor. The special servicer also reviewed the VIE's governing documents to ensure that the special servicer would be allowed to act quickly and effectively in situations in which a loan becomes delinquent. The special servicer concluded the VIE's governing documents allowed the special servicer to adequately monitor and direct the performance of the underlying loans. ##### [810-10-55-101](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-101) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:712c63a60f87c43829bac38e8b183c05f25bc29ce99fbec206cb04d6f7cea939 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For its services as primary servicer, the transferor earns a fixed fee, calculated as a percentage of the unpaid principal balance on the underlying loans. The special servicer also earns a fixed fee, calculated as a percentage of the unpaid principal balance on the underlying loans. The fees paid to the primary and special servicer are both of the following: 1. a Compensation for services provided and commensurate with the level of effort required to provide the services 2. b Part of a service arrangement that includes only terms, conditions, or amounts that are customarily present in arrangements for similar services negotiated at arm's length. No party has the ability to remove the primary servicer or the special servicer. ##### [810-10-55-102](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-102) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:cc1dab8365d740390e19da4bd1ff1e585662695f5d1cadacc18b974828dbf27a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To evaluate the facts and circumstances and determine which reporting entity, if any, is the primary beneficiary of a VIE, paragraph [810-10-25-38A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A) requires that a reporting entity determine the purpose and design of the VIE, including the risks that the VIE was designed to create and pass through to its variable interest holders. In making this assessment, the variable interest holders of the VIE determined the following: 1. a The primary purposes for which the VIE was created were to provide liquidity to the transferor to originate additional loans and to provide investors with the ability to invest in a pool of commercial mortgage loans. 2. b The VIE was marketed to debt investors as a VIE that would be exposed to the credit risk associated with the possible default by the borrowers with respect to principal and interest payments, with the equity tranche designed to absorb the first dollar risk of loss. Additionally, the marketing of the transaction indicated that such risks would be mitigated by subordination of the equity tranche. 3. c The VIE is not exposed to prepayment risk because the commercial mortgage loans contain provisions that require the borrower to pay the full scheduled interest and principal if the loan is extinguished prior to maturity. ##### [810-10-55-103](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-103) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:904b4168cfbf26e46a95442a4a9c8fcfaf5407ac65f962fcc9b551cb61c52c9c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The special servicer and the bondholders are the variable interest holders in the VIE. The fees paid to the transferor do not represent a variable interest on the basis of a consideration of the conditions in paragraphs [810-10-55-37 through 55-38](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-37) . The fees paid to the special servicer represent a variable interest on the basis of a consideration of the conditions in those paragraphs, specifically paragraph [810-10-55-37(c)](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-37), because of the special servicer holding the equity tranche. If the special servicer was only receiving fees and did not hold the equity tranche and if its related parties did not hold any variable interests in the VIE, then the fees would not be a variable interest. ##### [810-10-55-104](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-104) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:f4ec5f54cf5bfaf579e30659ebc3654f63b7e10874c7f3dc4e390c8180a51682 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [810-10-25-38B](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38B) requires that a reporting entity identify which activities most significantly impact the VIE's economic performance and determine whether it has the power to direct those activities. The economic performance of the VIE is most significantly impacted by the performance of its underlying assets. Thus, the activities that most significantly impact the VIE's economic performance are the activities that most significantly impact the performance of the underlying assets. The special servicer has the ability to manage the VIE's assets that are delinquent or in default to improve the economic performance of the VIE. Additionally, the special servicer, as the equity holder, can approve budgets, leases, and property managers on foreclosed property. The special servicing activities are performed only upon delinquency or default of the underlying assets. However, a reporting entity's ability to direct the activities of a VIE when circumstances arise or events happen constitutes power if that ability relates to the activities that most significantly impact the economic performance of the VIE. A reporting entity does not have to exercise its power in order to have power to direct the activities of a VIE. The special servicer's involvement in the design of the VIE does not, in isolation, result in the special servicer being the primary beneficiary of the VIE. However, in this situation, that involvement indicated that the special servicer had the opportunity and the incentive to establish arrangements that result in the special servicer being the variable interest holder with the power to direct the activities that most significantly impact the VIE's economic performance. ##### [810-10-55-105](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-105) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:d114ac417c718f9a0fe8800394a50973eb6db42de801169fd7fbe50a95afd7dd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The bondholders of the VIE have no voting rights and no other rights that provide them with the power to direct the activities that most significantly impact the VIE's economic performance. ##### [810-10-55-106](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-106) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:490e9612ce55e04cae3e34838fe896c978c989f4da1c7475fbe4be4afbc458e7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The activities that the primary servicer has the power to direct are administrative in nature and do not most significantly impact the VIE's economic performance. In addition, the primary servicer, and its related parties, do not hold a variable interest in the VIE. Thus, the primary servicer cannot be the primary beneficiary of the VIE. ##### [810-10-55-107](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-107) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:6f29310d5214b4491608b8244098f9a20af3ea81551b027a099c3f2f49e2d9f2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a reporting entity has the power to direct the activities of a VIE that most significantly impact the VIE's economic performance, then under the requirements of paragraph [810-10-25-38A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A), that reporting entity also is required to determine whether it has the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. ##### [810-10-55-108](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-108) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:3d1f1026d6fb2ed15c0da5c88098946f92fbf8452087c077b92b42e9dd891b50 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The special servicer, for its servicing activities, receives a fixed fee that provides it with the right to receive benefits of the VIE. The fees paid to the special servicer are both of the following: 1. a Compensation for services provided and commensurate with the level of effort required to provide the services 2. b Part of a service arrangement that includes only terms, conditions, or amounts that are customarily present in arrangements for similar services negotiated at arm's length. Therefore, the fees meet the criteria in paragraph [810-10-25-38H](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38H), and they should not be considered for purposes of evaluating the characteristic in paragraph [810-10-25-38A(b)](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A). The special servicer, as the equity tranche holder, has the obligation to absorb losses and the right to receive benefits, either of which could potentially be significant to the VIE. As equity tranche holder, the special servicer is the most subordinate tranche and therefore absorbs the first dollar risk of loss and has the right to receive benefits, including the VIE's actual residual returns, if any. ##### [810-10-55-109](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-109) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:7de1b46a4ba84da9f31b7c5bcccc87b6897ad03bcb51bf4c3d5c1047221329cf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On the basis of the specific facts and circumstances presented in this Case and the analysis performed, the special servicer would be deemed to be the primary beneficiary of the VIE because: 1. a It is the variable interest holder with the power to direct the activities of the VIE that most significantly impact the VIE's economic performance. 2. b As the equity tranche holder, it has the obligation to absorb losses of the VIE and the right to receive benefits from the VIE, either of which could potentially be significant to the VIE. ##### [810-10-55-110](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-110) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:b2a517110f5a456eb3b52caa347f123b952ce1a6ed517552b8c7d1183eaca426 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A VIE is created and financed with $90 of AAA-rated fixed-rate debt securities, $6 of BB-rated fixed-rate debt securities, and $4 of equity. All debt securities issued by the VIE are held by third-party investors. The equity tranche is held 35 percent by the manager of the VIE and 65 percent by a third-party investor. The VIE uses the proceeds to purchase a portfolio of asset-backed securities with varying tenors and interest rates. ##### [810-10-55-111](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-111) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:f32386474f910cac30224a24d06a724d92fbe874c2497e7fd7ff84403eb902be Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The transaction was marketed to potential debt investors as an investment in a portfolio of asset-backed securities with exposure to the credit risk associated with the possible default by the issuers of the asset-backed securities in the portfolio and to the interest rate risk associated with the management of the portfolio. The equity tranche was designed to absorb the first dollar risk of loss related to credit risk and interest rate risk and to receive any residual returns from a favorable change in interest rates or credit risk that affects the proceeds received on the sale of investments in the portfolio. ##### [810-10-55-112](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-112) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:b3a6bd1d1b8b91df7ab4add33033a001a5a0d0c59e5119fcd3725cc03007fe1e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The assets of the VIE are managed within the parameters established by the underlying trust documents. The parameters provide the manager with the latitude to manage the VIE's assets while maintaining an average portfolio rating of single B-plus or higher. If the average rating of the portfolio declines, the VIE's governing documents require that the manager's discretion in managing the portfolio be curtailed. ##### [810-10-55-113](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-113) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:cbc384bbdd71bc10c12509f34fbe3b93afc89efc30ba5024b298d6e7a17c88ff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For its services, the manager earns a base, fixed fee, and a performance fee in which it receives a portion of the VIE's profit above a targeted return. The fees paid to the manager are both of the following: 1. a Compensation for services provided and commensurate with the level of effort required to provide the services 2. b Part of a service arrangement that includes only terms, conditions, or amounts that are customarily present in arrangements for similar services negotiated at arm's length. The manager can be removed, [without cause](https://asc.understandingaccounting.org/glossary/w/#without-cause "Without cause means that no reason need be given for the dissolution (liquidation) of the limited partnership or removal of the general partners.") (as distinguished from [with cause](https://asc.understandingaccounting.org/glossary/w/#with-cause "With cause generally restricts the limited partners' ability to dissolve (liquidate) the limited partnership or remove the general partners in situations that include, but that are not limited to, fraud, illegal acts, gross negligence, and bankruptcy of the general partners.")), by a simple majority decision of the AAA-rated debt holders. As the debt of the entity is widely dispersed, no one party has the ability to unilaterally remove the manager. If removal of the manager occurs, the manager will continue to hold a 35 percent equity interest in the VIE. ##### [810-10-55-114](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-114) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:492fc2895ca0aea28d2d3a5677287ad3a109ddf6cb17c7d1b7f73b234e288afa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The third-party equity investor has rights that are limited to administrative matters. ##### [810-10-55-115](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-115) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:e8d11711659f2c766155a21914a2884710392124dd6c98d957c3675af95b54ee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To evaluate the facts and circumstances and determine which reporting entity, if any, is the primary beneficiary of a VIE, paragraph [810-10-25-38A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A) requires that a reporting entity determine the purpose and design of the VIE, including the risks that the VIE was designed to create and pass through to its variable interest holders. In making this assessment, the variable interest holders of the VIE determined the following: 1. a The primary purposes for which the VIE was created were to provide investors with the ability to invest in a pool of asset-backed securities, to earn a positive spread between the interest that the VIE earns on its portfolio and the interest paid to the debt investors, and to generate management fees for the manager. 2. b The transaction was marketed to potential debt investors as an investment in a portfolio of asset-backed securities with exposure to the credit risk associated with the possible default by the issuers of the asset-backed securities in the portfolio and to the interest rate risk associated with the management of the portfolio. Additionally, the marketing of the transaction indicated that such risks would be mitigated by the support from the equity tranche. 3. c The equity tranche was designed to absorb the first dollar risk of loss related to credit risk and interest rate risk and to receive any residual returns from a favorable change in interest rates or credit risk that affects the proceeds received on the sale of asset-backed securities in the portfolio. ##### [810-10-55-116](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-116) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:61b262bac37bb4247fa35860510538acafba92f5ec967c3b73b199ca5196a67b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The third-party debt investors, the third-party equity investor, and the manager are the variable interest holders in the VIE. The fees paid to the manager also represent a variable interest on the basis of a consideration of the conditions in paragraphs [810-10-55-37 through 55-38](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-37) , specifically paragraph [810-10-55-37(c)](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-37), because of the manager holding the equity tranche. If the manager was only receiving fees and did not hold the equity tranche and if its related parties did not hold any variable interests in the VIE, then the fees would not be a variable interest. ##### [810-10-55-117](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-117) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:a638550cc70bad108923d40cf04c24abc2cf463725ef404638552b1eedcca5eb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [810-10-25-38B](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38B) requires that a reporting entity identify which activities most significantly impact the VIE's economic performance and determine whether it has the power to direct those activities. The economic performance of the VIE is most significantly impacted by the performance of the VIE's portfolio of assets. Thus, the activities that most significantly impact the VIE's economic performance are the activities that most significantly impact the performance of the portfolio of assets. The manager has the ability to manage the VIE's assets within the parameters of the trust documents. If the average rating of the portfolio declines, the VIE's governing documents require that the manager's discretion in managing the portfolio be curtailed. Although the AAA-rated debt holders can remove the manager without cause, no one party has the unilateral ability to exercise the kick-out rights over the manager. Therefore, such kick-out rights would not be considered in this primary beneficiary analysis. ##### [810-10-55-118](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-118) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:18ed8790d46cba8a2b0e93893237ac8463e8ade270ccd15a6f4d168d01ff660f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The debt holders of the VIE do not have voting rights or other rights that provide them with the power to direct activities that most significantly impact the VIE's economic performance. Although the AAA-rated debt holders can remove the manager without cause, no one party has the unilateral ability to exercise the kick-out rights over the manager. ##### [810-10-55-119](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-119) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:372b2bfe2dba728a0c3b3ea1c43de8998aaf9f3231ad587149ff5ce888f94770 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The third-party equity investor has the power to direct certain activities. However, the activities that the third-party equity investor has the power to direct are administrative and do not most significantly impact the VIE's economic performance. ##### [810-10-55-120](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-120) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:480dcbe6029dda69c8844eb4a28ddaf0085a8e8adcf917174ac209916ceab2c0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a reporting entity has the power to direct the activities of a VIE that most significantly impact the VIE's economic performance, then under the requirements of paragraph [810-10-25-38A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A), that reporting entity also is required to determine whether it has the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The manager, as the 35 percent equity tranche holder, has the obligation to absorb losses and the right to receive benefits. As equity tranche holder, the manager has the most subordinate tranche and therefore absorbs 35 percent of the first dollar risk of loss and has the right to receive 35 percent of any residual benefits. The fees paid to the manager are both of the following: 1. a Compensation for services provided and commensurate with the level of effort required to provide the services 2. b Part of a service arrangement that includes only terms, conditions, or amounts that are customarily present in arrangements for similar services negotiated at arm's length. Therefore, the fees meet the criteria in paragraph [810-10-25-38H](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38H), and they should not be considered for purposes of evaluating the characteristic in paragraph [810-10-25-38A(b)](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A). Through the equity interest, the manager has the obligation to absorb losses of the VIE that could potentially be significant to the VIE and the right to receive benefits from the VIE that could potentially be significant to the VIE. ##### [810-10-55-121](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-121) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:159f8f2fbbcaa584c54e01b441d46d7d67cba958c87618c1dc731603815b58b1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On the basis of the specific facts and circumstances presented in this Case and the analysis performed, the manager would be deemed to be the primary beneficiary of the VIE because: 1. a It is the variable interest holder with the power to direct the activities of the VIE that most significantly impact the VIE's economic performance (and no single entity has the unilateral ability to exercise kick-out rights). 2. b Through its equity interest, it has the obligation to absorb losses of the VIE that could potentially be significant to the VIE and the right to receive benefits from the VIE that could potentially be significant to the VIE. ##### [810-10-55-122](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-122) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:96106640c9691f8c7fcafaba01639ed65b71b310b319cee9741ffa8fc89256c5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A VIE is created and financed with $94 of AAA-rated fixed-rate short-term debt with a 6-month maturity and $6 of equity. The VIE uses the proceeds to purchase a portfolio of floating-rate debt with an average life of four years and varying interest rates and short-term deposits with highly rated banks. The short-term debt securities and equity are held by multiple third-party investors. Upon maturity of the short-term debt, the VIE will either refinance the debt with existing investors or reissue the debt to new investors at existing market rates. ##### [810-10-55-123](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-123) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:e026180c0f9942efeef4860a5ff68872f223a3913f2f508d01285a8252e98f80 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The primary purpose of the VIE is to generate profits by maximizing the spread it earns on its asset portfolio and its weighted-average cost of funding. The transaction was marketed to potential debt investors as an investment in a portfolio of high-quality debt with exposure to the credit risk associated with the possible default by the issuers of the debt in the portfolio. The equity tranche is designed to absorb the first dollar risk of loss related to credit, liquidity, changes in fair value, and interest rate risk and to receive any benefit from a favorable change in credit, changes in fair value, and interest rates. ##### [810-10-55-124](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-124) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:4a0b18e429fb18eb62b059dba095982cd07832bd6471f329a280fc4e9c292c5e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The VIE is exposed to liquidity risk because the average tenor of the assets is greater than its liabilities. To mitigate liquidity risk, the VIE maintains a certain portion of its assets in short-term deposits with highly rated banks. The VIE has not entered into a liquidity facility to further mitigate liquidity risk. ##### [810-10-55-125](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-125) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:e1485a7dc1012807e9cc2f43570ed8bb76d8c6c25bb38cd5138a6ff77bb697f0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The sponsor of the VIE was significantly involved with the creation of the VIE. The sponsor performs various functions to manage the operations of the VIE, which include: 1. a Investment management—This management must adhere to the investment guidelines established at inception of the VIE. These guidelines include descriptions of eligible investments and requirements regarding the composition of the credit portfolio (including limits on country risk exposures, diversification limits, and ratings requirements). 2. b Funding management—This function provides funding management and operational support in relation to the debt issued and the equity with the objective of minimizing the cost of borrowing, managing interest rate and liquidity risks, and managing the capital adequacy of the VIE. 3. c Defeasance management—An event of defeasance occurs upon the failure of the rating agencies to maintain the ratings of the debt securities issued by the VIE at or above certain specified levels. In the event of defeasance, the sponsor is responsible for overseeing the orderly liquidation of the investment portfolio and the orderly discharge of the VIE's obligations. This includes managing the market and credit risks of the portfolio. ##### [810-10-55-126](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-126) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:9c54cb5f338f007883b8584a0d6947943fa24b9725099015b420acd341c20111 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For its services, the sponsor receives a fixed fee, calculated as an annual percentage of the aggregate equity outstanding, and a performance-based fee, calculated as a percentage of the VIE's profit above a targeted return. The fees paid to the sponsor are both of the following: 1. a Compensation for services provided and commensurate with the level of effort required to provide the services 2. b Part of a service arrangement that includes only terms, conditions, or amounts that are customarily present in arrangements for similar services negotiated at arm's length. ##### [810-10-55-127](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-127) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:37f8eafa1e803ba356d476b8456191a3e949f897f1cec51a258c174c74b6eaf1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The debt security holders of the VIE have no voting rights. The equity holders have limited voting rights that are typically limited to voting on amendments to the constitutional documents of the VIE. ##### [810-10-55-128](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-128) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:ed77cc5155cc2f47ebf9a3259a843f2798f7d95bbaab4cc057dedfc5d44556ca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To evaluate the facts and circumstances and determine which reporting entity, if any, is the primary beneficiary of a VIE, paragraph [810-10-25-38A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A) requires that a reporting entity determine the purpose and design of the VIE, including the risks that the VIE was designed to create and pass through to its variable interest holders. In making this assessment, the variable interest holders of the VIE determined the following: 1. a The primary purposes for which the VIE was created were to provide investors with the ability to invest in a pool of high-quality debt, to maximize the spread it earns on its asset portfolio over its weighted-average cost of funding, and to generate management fees for the sponsor. 2. b The transaction was marketed to potential debt investors as an investment in a portfolio of high-quality debt with exposure to the credit risk associated with the possible default by the issuers of the debt in the portfolio. 3. c The equity tranche is negotiated to absorb the first dollar risk of loss related to credit, liquidity, fair value, and interest rate risk and to receive a portion of the benefit from a favorable change in credit, fair value, and interest rates. 4. d The principal risks to which the VIE is exposed include credit, interest rate, and liquidity risk. ##### [810-10-55-129](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-129) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:0a14ca1b2428cbd18f66d4fe0d748b36449e3f49fe99e451b73fa66c0b086f4c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The third-party debt investors, the third-party equity investors, and the sponsor are the variable interest holders in the VIE. The fees paid to the sponsor represent a variable interest on the basis of a consideration of the conditions in paragraphs [810-10-55-37 through 55-38](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-37) , specifically paragraph [810-10-55-37(c)](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-37), because of the sponsor having an implicit variable interest in the VIE as discussed in paragraph [810-10-55-132](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-132). If the sponsor was only receiving fees and did not have the implicit variable interest and if its related parties did not hold any variable interests in the VIE, then the fees would not be a variable interest. ##### [810-10-55-130](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-130) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:43fe80394f2852c6f1f26feb2d0756907ef9ca615c2a3e5ae8146ac92b42072f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [810-10-25-38B](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38B) requires that a reporting entity identify which activities most significantly impact the VIE's economic performance and determine whether it has the power to direct those activities. The economic performance of the VIE is significantly impacted by the performance of the VIE's portfolio of assets and by the terms of the short-term debt. Thus, the activities that significantly impact the VIE's economic performance are the activities that significantly impact the performance of the portfolio of assets and the terms of the short-term debt (when the debt is refinanced or reissued). The sponsor manages the VIE's investment, funding, and defeasance activities. The fact that the sponsor was significantly involved with the creation of the VIE does not, in isolation, result in the sponsor being the primary beneficiary of the VIE. However, the fact that the sponsor was involved with the creation of the VIE indicated that the sponsor had the opportunity and the incentive to establish arrangements that result in the sponsor being the variable interest holder with the power to direct the activities that most significantly impact the VIE's economic performance. ##### [810-10-55-131](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-131) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:4314e5204af0fcd4b687962621888c4fa6101e5c905d6e2ee0770d8795249ebf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The debt security holders of the VIE have no voting rights and no other rights that provide them with the power to direct the activities that most significantly impact the VIE's economic performance. Although the equity holders have voting rights, they are limited to voting on amendments to the constitutional documents of the VIE, and those rights do not provide the equity holders with the power to direct the activities that most significantly impact the VIE's economic performance. ##### [810-10-55-132](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-132) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:e04e6d14cbc7d7d0263f40189938fd7d7ea18513fa96c7faff51b98a3fb3f669 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a reporting entity has the power to direct the activities of a VIE that most significantly impact the VIE's economic performance, then under the requirements of paragraph [810-10-25-38A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A), that reporting entity also is required to determine whether it has the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The sponsor considered whether it had an implicit financial responsibility to ensure that the VIE operates as designed. Based on paragraphs [810-10-25-51](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-51) and [810-10-25-54](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-54), the sponsor determined that it has an implicit financial responsibility and that such obligation requires the sponsor to absorb losses that could potentially be significant to the VIE. This determination was influenced by the sponsor's concern regarding the risk to its reputation in the marketplace if the VIE did not operate as designed. The fees paid to the sponsor are both of the following: 1. a Compensation for services provided and commensurate with the level of effort required to provide the services 2. b Part of a service arrangement that includes only terms, conditions, or amounts that are customarily present in arrangements for similar services negotiated at arm's length. Therefore, the fees meet the criteria in paragraph [810-10-25-38H](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38H), and they should not be considered for purposes of evaluating the characteristic in paragraph [810-10-25-38A(b)](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A). ##### [810-10-55-133](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-133) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:52d0a10ef970f9c7bd45cf3936b16be5f0a52a515c31443eb5b3fae751c00723 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On the basis of the specific facts and circumstances presented in this Case and the analysis performed, the sponsor would be deemed to be the primary beneficiary of the VIE because: 1. a It is the variable interest holder with the power to direct the activities of the VIE that most significantly impact the VIE's economic performance. 2. b Through its implicit financial responsibility to ensure that the VIE operates as designed, it has the obligation to absorb losses of the VIE that could potentially be significant to the VIE. ##### [810-10-55-134](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-134) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:dcb78892b0096c3243128d1082f1ca00fcab3046d276900642e59919c1f88f58 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A VIE is created by a reporting entity (the sponsor) and financed with $98 of AAA-rated fixed-rate short-term debt with a 3-month maturity and $2 of subordinated notes. The VIE uses the proceeds to purchase a portfolio of medium-term assets with average tenors of three years. The asset portfolio is obtained from multiple sellers. The short-term debt and subordinated notes are held by multiple third-party investors. Upon maturity of the short-term debt, the VIE will either refinance the debt with existing investors or reissue the debt to new investors. ##### [810-10-55-135](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-135) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:1c3ae90a993f4b40d709c05e63e552def2c57434af53db2e1554b53acd4f5e53 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The sponsor of the VIE provides credit enhancement in the form of a letter of credit equal to 5 percent of the VIE's assets and it provides a liquidity facility to fund the cash flow shortfalls on 100 percent of the short-term debt. Cash flow shortfalls could arise due to a mismatch between collections on the underlying assets of the VIE and payments due to the short-term debt holders or to the inability of the VIE to refinance or reissue the short-term debt upon maturity. ##### [810-10-55-136](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-136) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:9b9acc8ef6b94a6502820e38f4a7d28a6e2f5b90b923271b282ee0536d3d98c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A credit default of the VIE's assets resulting in deficient cash flows is absorbed as follows: 1. a First by the subordinated note holders 2. b Second by the sponsor's letter of credit 3. c Third by the short-term debt holders. The sponsor's liquidity facility does not advance against defaulted assets. ##### [810-10-55-137](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-137) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:727778db61d1e62e5625fe35ac152ef48832d59c642563e034b66b9fb44e1c09 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The VIE is exposed to liquidity risk because the average life of the assets is greater than that of its liabilities. The VIE enters into a liquidity facility with the sponsor to mitigate liquidity risk. ##### [810-10-55-138](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-138) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:c6bb1b086256fe3051b153d1ac307029e3ca7eb37da9c293b01a6ff1414e073c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The transaction was marketed to potential debt investors as an investment in a portfolio of highly rated medium-term assets with minimal exposure to the credit risk associated with the possible default by the issuers of the assets in the portfolio. The subordinated notes were designed to absorb the first dollar risk of loss related to credit. The VIE is marketed to all investors as having a low probability of credit exposure due to the nature of the assets obtained. Furthermore, the VIE is marketed to the short-term debt holders as having protection from liquidity risk due to the liquidity facility provided by the sponsor. ##### [810-10-55-139](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-139) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:28c7c1860d45e9e2d28af3adeca6f3cb1a5bf65d317a63de6b5a3cd4ffc006e8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The sponsor of the VIE performs various functions to manage the operations of the VIE. Specifically, the sponsor: 1. a Establishes the terms of the VIE 2. b Approves the sellers permitted to sell to the VIE 3. c Approves the assets to be purchased by the VIE 4. d Makes decisions regarding the funding of the VIE including determining the tenor and other features of the short-term debt issued 5. e Administers the VIE by monitoring the assets, arranging for debt placement, compiling monthly reports, and ensuring compliance with the VIE's credit and investment policies. ##### [810-10-55-140](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-140) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:55a30cf76058534716d4137299c9dc9fdebfa79b38e5c1afdbfb0f992489bb3f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For providing the letter of credit, liquidity facility, and management services, the sponsor receives fixed fees that are calculated as an annual percentage of the asset value. The short-term debt holders and subordinated note holders have no voting rights. The fees paid to the sponsor for its management services are both of the following: 1. a Compensation for services provided and commensurate with the level of effort required to provide the services 2. b Part of a service arrangement that includes only terms, conditions, or amounts that are customarily present in arrangements for similar services negotiated at arm's length. ##### [810-10-55-141](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-141) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:81dd14411a3d96e20e6098c542d3c816d56418bef955a2f28bde1a63ee688609 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To evaluate the facts and circumstances and determine which reporting entity, if any, is the primary beneficiary of a VIE, paragraph [810-10-25-38A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A) requires that a reporting entity determine the purpose and design of the VIE, including the risks that the VIE was designed to create and pass through to its variable interest holders. In making this assessment, the variable interest holders of the VIE determined the following: 1. a The primary purposes for which the VIE was created were to provide investors with the ability to invest in a pool of highly rated medium-term assets, to provide the multiple sellers to the VIE with access to lower-cost funding, to earn a positive spread between the interest that the VIE earns on its asset portfolio and its weighted-average cost of funding, and to generate fees for the sponsor. 2. b The transaction was marketed to potential debt investors as an investment in a portfolio of highly rated medium-term assets with minimal exposure to the credit risk associated with the possible default by the issuers of the assets in the portfolio. The subordinated debt is designed to absorb the first dollar risk of loss related to credit and interest rate risk. The VIE is marketed to all investors as having a low probability of credit loss due to the nature of the assets obtained. Furthermore, the VIE is marketed to the short-term debt holders as having protection from liquidity risk due to the liquidity facility provided by the sponsor. 3. c The principal risks to which the VIE is exposed include credit, interest rate, and liquidity. ##### [810-10-55-142](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-142) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:7a5ec252d0d218ce7a6f320ec683f1c380baa8109e2a24f6a946b548abad3583 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The short-term debt holders, the third-party subordinated note holders, and the sponsor are the variable interest holders in the VIE. The letter of credit and liquidity facility provided by the sponsor protect holders of other variable interests from suffering losses of the VIE. Therefore, the sponsor's fees for the letter of credit and liquidity facility are not eligible for the evaluation in paragraph [810-10-55-37](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-37) and are variable interests in the VIE. The fees paid to the sponsor for its management services represent a variable interest on the basis of a consideration of the conditions in paragraphs [810-10-55-37 through 55-38](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-37) , specifically paragraph [810-10-55-37(c)](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-37), because of the sponsor providing the letter of credit and liquidity facility and the fees for the letter of credit and liquidity facility. If the sponsor was only receiving management fees, did not provide the letter of credit and liquidity facility, and did not receive fees for the letter of credit and liquidity facility and if its related parties did not hold any variable interests in the VIE, then the management fees would not be a variable interest. ##### [810-10-55-143](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-143) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:0967b9a187a7e0b2d347eadca4253bd4742b437a7ead9b7b00097e702adf0234 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [810-10-25-38B](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38B) requires that a reporting entity identify which activities most significantly impact the VIE's economic performance and determine whether it has the power to direct those activities. The economic performance of the VIE is significantly impacted by the performance of the VIE's portfolio of assets and by the terms of the short-term debt. Thus, the activities that significantly impact the VIE's economic performance are the activities that significantly impact the performance of the portfolio of assets and the terms of the short-term debt (when the debt is refinanced or reissued). The sponsor manages the operations of the VIE. Specifically, the sponsor establishes the terms of the VIE, approves the sellers permitted to sell to the VIE, approves the assets to be purchased by the VIE, makes decisions about the funding of the VIE including determining the tenor and other features of the short-term debt issued, and administers the VIE by monitoring the assets, arranging for debt placement, and ensuring compliance with the VIE's credit and investment policies. The fact that the sponsor was significantly involved with the creation of the VIE does not, in isolation, result in the sponsor being the primary beneficiary of the VIE. However, the fact that the sponsor was involved with the creation of the VIE may indicate that the sponsor had the opportunity and the incentive to establish arrangements that result in the sponsor being the variable interest holder with the power to direct the activities that most significantly impact the VIE's economic performance. ##### [810-10-55-144](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-144) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:fc468f8f37bc87ecab7de8e22d28499b73ed8c9a70f28a61065145852defdb16 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The short-term debt holders and subordinated note holders of the VIE have no voting rights and no other rights that provide them with power to direct the activities that most significantly impact the VIE's economic performance. ##### [810-10-55-145](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-145) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:aa360b234f30f924d3f1e7dc74363e26b5e63e080baaefdaf6fda99a6b3cbd05 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a reporting entity has the power to direct the activities of a VIE that most significantly impact the VIE's economic performance, then under the requirements of paragraph [810-10-25-38A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A), that reporting entity also is required to determine whether it has the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The fees paid to the sponsor for its management services are both of the following: 1. a Compensation for services provided and commensurate with the level of effort required to provide the services 2. b Part of a service arrangement that includes only terms, conditions, or amounts that are customarily present in arrangements for similar services negotiated at arm's length. Therefore, the management fees meet the criteria in paragraph [810-10-25-38H](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38H), and they should not be considered for purposes of evaluating the characteristic in paragraph [810-10-25-38A(b)](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A). However, the sponsor still, through its letter of credit and liquidity facility fees, receives benefits from the VIE that could potentially be significant to the VIE. The sponsor, through its letter of credit and liquidity facility, also has the obligation to absorb losses of the VIE that could potentially be significant to the VIE. ##### [810-10-55-146](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-146) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:53776e95f745446a8dcb0826873ba6ac0fdf034a7ab035903ec69922e08ab721 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On the basis of the specific facts and circumstances presented in this Case and the analysis performed, the sponsor would be deemed to be the primary beneficiary of the VIE because: 1. a It is the variable interest holder with the power to direct the activities of the VIE that most significantly impact the VIE's economic performance. 2. b Through its letter of credit and liquidity facility, the sponsor has the obligation to absorb losses that could potentially be significant to the VIE, and, through its fees for the letter of credit and liquidity facility, the sponsor has the right to receive benefits that could potentially be significant to the VIE. ##### [810-10-55-147](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-147) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:e8520540301df8dbca5169154a8badd27157490ca54e94025d665a101284c658 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A VIE is created and financed with $100 of a single class of investment-grade 30-year fixed-rate debt securities. The VIE uses the proceeds to purchase $100 of 30-year fixed-rate residential mortgage loans from the transferor. The VIE enters into a guarantee facility that absorbs 100 percent of the credit losses incurred on the VIE's assets. The assets acquired by the VIE are underwritten by the transferor in accordance with the parameters established by the guarantor. Additionally, all activities of the VIE are prespecified by the trust agreement and servicing guide, which are both established by the guarantor. No critical decisions are generally required for the VIE unless default of an underlying asset is reasonably foreseeable or occurs. ##### [810-10-55-148](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-148) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:6967491bb21db0cfa9a30a99fe69cde78ab699a813a45c1406e5e7d2ef98a95e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The transaction was marketed to potential debt security holders as an investment in a portfolio of residential mortgage loans with exposure to the credit risk of the guarantor and to the prepayment risk associated with the underlying loans of the VIE. Each month, the security holders receive interest and principal payments in proportion to their percentage ownership of the underlying loans. ##### [810-10-55-149](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-149) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:977aeb411623753a12c134b0e50cf540d4ee840c187d1e49d30edb5fb4fa143b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If there is a shortfall in contractually required loan payments from the borrowers or if the loan is foreclosed on and the liquidation of the underlying property does not generate sufficient proceeds to meet the required payments on all securities, the guarantor will make payments to the debt securities holders to ensure timely payment of principal and accrued interest on the debt securities. ##### [810-10-55-150](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-150) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:ece59d1580fe902565f014f5e3fd9ee9e4d9d0fcff86992e665f2393d37dde64 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guarantor also serves as the master servicer for the VIE. As master servicer, the guarantor services the securities issued by the VIE. Generally, if a mortgage loan is 120 days (or 4 consecutive months) delinquent, and if other circumstances are met, the guarantor has the right to buy the loan from the VIE. The master servicer can only be removed for a material breach in its obligations. As compensation for the guarantee and services provided, the guarantor receives a fee that is calculated monthly as a percentage of the unpaid principal balance on the underlying loans. ##### [810-10-55-151](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-151) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:32a8aa3d11293a679befc9bcbda04198ded475bc130ba68fdcc517d98eac0b18 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As master servicer, the guarantor also is responsible for supervising and monitoring the servicing of the residential mortgage loans (primary servicing). The VIE's governing documents provide that the guarantor is responsible for the primary servicing of the loans; however, the guarantor is allowed to, and does, hire the transferor to perform primary servicing activities that are conducted under the supervision of the guarantor. The guarantor monitors the primary servicer's performance and has the right to remove the primary servicer at any time it considers such a removal to be in the best interest of the security holders. ##### [810-10-55-152](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-152) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:19cb23df64ed0cf0a6ffe97be7958adc201a69fecb8d4a1b4ccb0b76c1d884ef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The primary servicing activities are performed under the servicing guide established by the guarantor. Examples of the primary servicing activities include collecting and remitting principal and interest payments, administering escrow accounts, and managing default. When a loan becomes delinquent or it is reasonably foreseeable of becoming delinquent, the primary servicer can propose a default mitigation strategy in which the guarantor can approve, reject, or require another course of action if it considers such action is in the best interest of the security holders. As compensation for servicing the underlying loans, the transferor receives a fee that is calculated monthly as a percentage of the unpaid principal balance on the underlying loans. ##### [810-10-55-153](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-153) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:4f3702d57d6b71fde82bcaf2cff5305a6233106e03fb36596d38319a8c075111 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To evaluate the facts and circumstances and determine which reporting entity, if any, is the primary beneficiary of a VIE, paragraph [810-10-25-38A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A) requires that a reporting entity determine the purpose and design of the VIE, including the risks that the VIE was designed to create and pass through to its variable interest holders. In making this assessment, the variable interest holders of the VIE determined the following: 1. a The primary purposes for which the VIE was created were to provide investors with the ability to invest in a pool of residential mortgage loans with a third-party guarantee for 100 percent of the principal and interest payments due on the mortgage loans in the VIE, to provide the transferor to the VIE with access to liquidity for its originated loans and an ongoing servicing fee, and to generate fees for the guarantor. 2. b The transaction was marketed to potential debt security holders as an investment in a portfolio of residential mortgage loans with exposure to the credit risk of the guarantor and prepayment risk associated with the underlying assets of the VIE. 3. c The principal risks to which the VIE is exposed include credit risk of the underlying assets, prepayment risk, and the risk of fluctuations in the value of the underlying real estate. The credit risk of the underlying assets and the risk of fluctuations in the value of the underlying real estate are fully absorbed by the guarantor. ##### [810-10-55-154](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-154) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:d7cc71c065f4735a83c269c4bf7a03538f93232e9ed2aadbf7de6a271dca3b7d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The debt securities holders and the guarantor are the variable interest holders in the VIE. The fees paid to the transferor do not represent a variable interest on the basis of a consideration of the conditions in paragraphs [810-10-55-37 through 55-38](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-37) . The guarantee arrangement protects holders of other variable interests from suffering losses in the VIE because the guarantor is required to fully absorb the credit risk of the underlying assets of the VIE and the risk of fluctuations in the value of the underlying real estate. Therefore, the guarantor's fees are not eligible for the evaluation in paragraph [810-10-55-37](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-37). ##### [810-10-55-155](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-155) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:fc20c223381a2d879ea389424435c579c42d96350d5af8ecc2d32471299243f8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [810-10-25-38B](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38B) requires that a reporting entity identify which activities most significantly impact the VIE's economic performance and determine whether it has the power to direct those activities. The economic performance of the VIE is most significantly impacted by the performance of its underlying assets. Thus, the activities that most significantly impact the VIE's economic performance are the activities that most significantly impact the performance of the underlying assets. The guarantor, who is also the master servicer, has the ability (through establishment of the servicing terms, to appoint and remove the primary servicer, to direct default mitigation, and to purchase defaulted assets) to manage the VIE's assets that become delinquent (or may become delinquent in the reasonably foreseeable future) to improve the economic performance of the VIE. ##### [810-10-55-156](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-156) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:0e216c5aa5956e456d838c3ec541b5297530b996cf56a841376824db0c859019 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Prepayment risk is also a risk that the VIE was designed to create and pass through. However, no variable interest holder has the power to direct activities related to such risk. ##### [810-10-55-157](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-157) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:b6e401d651aa3bf2eb9a5e987cedb2516c3543ea402f8a7b96be900ad1dc5481 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because the guarantor is able to appoint and replace the primary servicer and direct default mitigation, the primary servicer does not have the power to direct the activities that most significantly impact the VIE's economic performance. In addition, the primary servicer and its related parties do not hold a variable interest in the VIE. Thus, the primary servicer cannot be the primary beneficiary of the VIE. Furthermore, the security holders have no voting rights and, thus, no power to direct the activities that most significantly impact the VIE's economic performance. ##### [810-10-55-158](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-158) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:403abcb261d6651fb199ced4c98d58cd0981e7aaaf727766ad22e4900675b5e2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a reporting entity has the power to direct the activities of a VIE that most significantly impact the VIE's economic performance, then under the requirements of paragraph [810-10-25-38A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A), that reporting entity also is required to determine whether it has the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The guarantor, through its fee arrangement, receives benefits, which may or may not potentially be significant under this analysis; however, the guarantor has the obligation to absorb losses of the VIE that could potentially be significant through its guarantee obligation. Therefore, the fees are not eligible for the evaluation in paragraph [810-10-25-38H](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38H), and they should be considered for purposes of evaluating the characteristic in paragraph [810-10-25-38A(b)](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A). ##### [810-10-55-159](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-159) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:668b6eb5b8432699d622d82a2148f27466fba469f9355983e3c17d65a10b40fc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On the basis of the specific facts and circumstances presented in this Case and the analysis performed, the guarantor would be deemed to be the primary beneficiary of the VIE because: 1. a It is the variable interest holder with the power to direct the activities of the VIE that most significantly impact the VIE's economic performance. 2. b Through its guarantee, it has the obligation to absorb losses of the VIE that could potentially be significant to the VIE. ##### [810-10-55-160](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-160) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:2c3e9ffc1d5ed998962ad7b830ca75ad4f3986fad591488bbec9a3484be19a40 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A VIE is created and financed with $100 of 30-year fixed-rate debt securities. The securities are issued in 2 tranches (a $90 senior tranche and a $10 residual tranche). The senior tranche securities are investment grade and are widely dispersed among third-party investors. The residual tranche securities are held by the transferor. The VIE uses the proceeds to purchase $100 of 30-year fixed-rate residential mortgage loans from a transferor. A default on the underlying loans is absorbed first by the residual tranche held by the transferor. All activities of the VIE are prespecified by a pooling and servicing agreement for the transaction. No critical decisions are generally required for the VIE unless default of an underlying asset is reasonably foreseeable or occurs. ##### [810-10-55-161](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-161) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:c6c4ed166518220b6f81c7638e06c6e7b7737db288e0bb30f0ee824a576e8564 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The transaction was marketed to potential senior debt security holders as an investment in a portfolio of residential mortgage loans with exposure to the credit risk of the underlying loan borrowers and to the prepayment risk associated with the underlying loans of the VIE. Each month the security holders receive interest and principal payments in proportion to their percentage of ownership of the underlying loans. The residual tranche was designed to provide a credit enhancement to the transaction and to absorb the first dollar risk of loss related to credit. ##### [810-10-55-162](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-162) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:f854af16ceb74ea0a9579d5333bf262113e8e2fca1cd6d7973cb26822d14c5e7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The primary servicing responsibilities are retained by the transferor. No party has the ability to remove the transferor as servicer. ##### [810-10-55-163](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-163) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:411142e35e4ed3d40098ad688e641d32575cc650ddc4f387b21169d795cb0d52 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The servicing activities are performed in accordance with the pooling and servicing agreement. Examples of the servicing activities include collecting and remitting principal and interest payments, administering escrow accounts, monitoring overdue payments, and overall default management. Default management includes evaluating the borrower's financial condition to determine which loss mitigation strategy (specified in the pooling and servicing agreement) will maximize recoveries on a particular loan. The acceptable default management strategies are limited to the actions specified in the pooling and servicing agreement and include all of the following: 1. a Modifying the terms of loans when default is reasonably foreseeable 2. b Temporary forbearance on collections of principal and interest (such amounts would be added to the unpaid balance on the loan) 3. c Short sales in which the servicer allows the underlying borrower to sell the mortgaged property even if the anticipated sale price will not permit full recovery of the contractual loan amounts. ##### [810-10-55-164](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-164) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:6adffa52279a958bd45cf5a55d206c1052560765fa5837385a7d6bbedfa89c25 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As compensation for servicing the underlying loans, the transferor receives a fee, calculated monthly as a percentage of the unpaid principal balance on the underlying loans. Although the servicing activities, particularly managing default, are required to be performed in accordance with the pooling and servicing agreement, the transferor, as servicer, has discretion in determining which strategies within the pooling and servicing agreement to utilize to attempt to maximize the VIE's economic performance. The fees paid to the transferor are both of the following: 1. a Compensation for services provided and commensurate with the level of effort required to provide those services 2. b Part of a service arrangement that includes only terms, conditions, or amounts that are customarily present in arrangements for similar services negotiated at arm's length. ##### [810-10-55-165](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-165) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:bcfdb65f7fde198b6ef15f037b11f7fb8bfb786e68466fba10fdbbf4fb972495 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To evaluate the facts and circumstances and determine which reporting entity, if any, is the primary beneficiary of a VIE, paragraph [810-10-25-38A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A) requires that a reporting entity determine the purpose and design of the VIE, including the risks that the VIE was designed to create and pass through to its variable interest holders. In making this assessment, the variable interest holders of the VIE determined the following: 1. a The primary purposes for which the VIE was created were to provide investors with the ability to invest in a pool of residential mortgage loans and to provide the transferor to the VIE with access to liquidity for its originated loans and an ongoing servicing fee and potential residual returns. 2. b The transaction was marketed to potential senior debt security holders as an investment in a portfolio of residential mortgage loans with credit enhancement provided by the residual tranche and prepayment risk associated with the underlying assets of the VIE. The marketing of the transaction indicated that credit risk would be mitigated by the subordination of the residual tranche. 3. c The principal risks to which the VIE is exposed include credit of the underlying assets, prepayment risk, and the risk of fluctuations in the value of the underlying real estate. ##### [810-10-55-166](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-166) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:7fa958796d2d371a8e5c11241c11d99124f101c9e133904c657161eb3bbcd4ae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The debt security holders and the transferor are the variable interest holders in the VIE. The fee paid to the transferor (in its role as servicer) represents a variable interest on the basis of a consideration of the conditions in paragraphs [810-10-55-37 through 55-38](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-37) , specifically paragraph [810-10-55-37(c)](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-37), because of the transferor holding the residual tranche. If the transferor was only receiving fees and did not hold the residual tranche and if its related parties did not hold any variable interests in the VIE, then the fees would not be a variable interest. ##### [810-10-55-167](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-167) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:259c1f733b7d4eb1087e86656deb828acce0e2dba2a5a3c2f189afeb0b47f334 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [810-10-25-38B](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38B) requires that a reporting entity identify which activities most significantly impact the VIE's economic performance and determine whether it has the power to direct those activities. The economic performance of the VIE is most significantly impacted by the performance of its underlying assets. Thus, the activities that most significantly impact the VIE's economic performance are the activities that most significantly impact the performance of the underlying assets. The transferor, as servicer, has the ability to manage the VIE's assets that become delinquent (or are reasonably foreseeable of becoming delinquent) to improve the economic performance of the VIE. Additionally, no party can remove the transferor in its role as servicer. The default management activities are performed only after default of the underlying assets or when default is reasonably foreseeable. However, a reporting entity's ability to direct the activities of a VIE when circumstances arise or events happen constitutes power if that ability relates to the activities that most significantly impact the economic performance of the VIE. A reporting entity does not have to exercise its power in order to have power to direct the activities of a VIE. ##### [810-10-55-168](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-168) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:ca2e643460540c47ed4bee1b107933c84bddf50aa712eeb2057bb19397894761 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Prepayment risk is also a risk that the VIE was designed to create and pass through. However, no variable interest holder has the power to direct matters related to such risk. ##### [810-10-55-169](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-169) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:267885c75b9270ce6423bbc3110191e198a27a944fbad06b8fb680edf0c82540 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The senior security holders have no voting rights and, thus, no power to direct the activities that most significantly impact the VIE's economic performance. ##### [810-10-55-170](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-170) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:90a38f6b0744d5489a5f6dea398eab44801a96680375526476d1258cccdd7348 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a reporting entity has the power to direct the activities of a VIE that most significantly impact the VIE's economic performance, then under the requirements of paragraph [810-10-25-38A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A), that reporting entity also is required to determine whether it has the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The transferor, through its residual tranche ownership, has the obligation to absorb losses and the right to receive benefits, either of which could potentially be significant to the VIE. The fees paid to the transferor are both of the following: 1. a Compensation for services provided and commensurate with the level of effort required to provide those services 2. b Part of a service arrangement that includes only terms, conditions, or amounts that are customarily present in arrangements for similar services negotiated at arm's length. Therefore, the fees meet the criteria in paragraph [810-10-25-38H](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38H) and should not be considered for purposes of evaluating the characteristic in paragraph [810-10-25-38A(b)](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A). ##### [810-10-55-171](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-171) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:48057966e9605ec5df83ba3ed981d472c2245702f166e9e5e020f77ea4255280 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On the basis of the specific facts and circumstances presented in this Case and the analysis performed, the transferor would be deemed to be the primary beneficiary of the VIE because: 1. a It is the variable interest holder with the power to direct the activities of the VIE that most significantly impact the VIE's economic performance. 2. b Through its residual tranche ownership, it has the obligation to absorb losses and the right to receive benefits, either of which could potentially be significant to the VIE. ##### [810-10-55-172](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-172) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:2d0b475fa034b1b05d475931e90c2006e97e9a3a63aac1ce6d9e4538d7aec34d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A VIE is created and financed with $950 of 5-year fixed-rate debt and $50 of equity. The VIE uses the proceeds from the issuance to purchase an asset to be leased to a lessee with an AA credit rating. The equity is subordinate to the debt because the debt is paid before any cash flows are available to the equity investors. The lease has a five-year term and is classified as a direct financing lease by the lessor and as an operating lease by the lessee. The lessee, however, is considered the owner of the underlying asset for tax purposes and, thus, receives tax depreciation benefits. ##### [810-10-55-173](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-173) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:5dcfaff88b80dfafc6a7a94d96a40d29f01ca846992cf41bc1842752d3f5cc9d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The lessee is required to provide a first-loss residual value guarantee for the expected future value of the underlying asset at the end of five years (the option price) up to a specified percentage of the option price, and it has a fixed-price purchase option to acquire the underlying asset for the option price. If the lessee does not exercise the fixed-price purchase option at the end of the lease term, the lessee is required to remarket the underlying asset on behalf of the VIE. If the underlying asset is sold for an amount less than the option price, the lessee is required to pay the VIE the difference between the option price and the sales proceeds, which is not to exceed a specified percentage of the option price. If the underlying asset is sold for an amount greater than the option price, the lessee is entitled to the excess of the sales proceeds over the option price. A third-party residual value guarantor provides a very small additional residual value guarantee to the lessor VIE, which allows the lessor to achieve direct financing lease treatment. ##### [810-10-55-174](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-174) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:12b53aa33afca03727a2558444f4db1ca27fc8d3925692b2f6133dc9930f58f8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The governing documents for the VIE do not permit the VIE to buy additional assets or sell existing assets during the five-year holding period, and the terms of the lease agreement and the governing documents for the VIE do not provide the equity holders with the power to direct any activities of the VIE. The VIE was formed so that the lessee would have rights to use the underlying asset under an operating lease and would retain substantially all of the risks and rewards from appreciation or depreciation in value of the underlying asset. ##### [810-10-55-175](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-175) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:d3c515309a07ce58f5bc1a213f561beab08602576506513f1e87d2dc1cfd69de Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The transaction was marketed to potential investors as an investment in a portfolio of AA-rated assets collateralized by an underlying asset that is leased that would provide a fixed-rate return to debt holders equivalent to AA-rated assets. The return to equity investors is expected to be slightly greater than the return to the debt investors because the equity is subordinated to the debt. ##### [810-10-55-176](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-176) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:278f69504942394be988fb9bdcb3b4195d0e0e9e4c1507be9902fa885db1c73d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To evaluate the facts and circumstances and determine which reporting entity, if any, is the primary beneficiary of a VIE, paragraph [810-10-25-38A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A) requires that a reporting entity determine the purpose and design of the VIE, including the risks that the VIE was designed to create and pass through to its variable interest holders. In making this assessment, the variable interest holders of the VIE determined the following: 1. a The primary purpose for which the VIE was created was to provide the lessee with use of the underlying asset for five years with substantially all of the rights and obligations of ownership, including tax benefits. 2. b The VIE was marketed to potential investors as an investment in a portfolio of AA-rated assets collateralized by an underlying asset that is leased that would provide a fixed-rate return to debt holders equivalent to AA-rated assets. The return to equity investors is expected to be slightly greater than the return to the debt investors because the equity is subordinated to the debt. 3. c The residual value guarantee effectively transfers substantially all of the risk associated with the underlying asset (that is, decreases in value) to the lessee and the fixed-price purchase option effectively transfers substantially all of the rewards from the underlying asset (that is, increases in value) to the lessee. 4. d The VIE is designed to be exposed to the risks associated with a cumulative change in fair value of the underlying asset at the end of five years as well as credit risk related to the potential default by the lessee of its contractually required lease payments. ##### [810-10-55-177](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-177) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:b7f0106bf81cf96fd2363437763ae3a18c23d6c3500f876f38897caa30a82664 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The debt investors, the equity investors, and the lessee are the variable interest holders in the VIE. ##### [810-10-55-178](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-178) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:b2c96c9726027f6487ef1db4d4c0b2b9207d854daf525cea9011f63331ff24a7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [810-10-25-38B](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38B) requires that a reporting entity identify which activities most significantly impact the VIE's economic performance and determine whether it has the power to direct those activities. The economic performance of the VIE is significantly impacted by the fair value of the underlying asset and the credit of the lessee. The lessee's maintenance and operation of the underlying asset has a direct effect on the fair value of the underlying asset, and the lessee directs the remarketing of the underlying asset. The lessee also has the ability to increase the benefits it can receive and limit the losses it can suffer by the manner in which it uses the underlying asset and how it remarkets the underlying asset. ##### [810-10-55-179](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-179) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:e37ba25166ffe63004d02a73f61d1d0f9c01dc705a52d174be7618b1058d32c8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The debt holders do not have the power to direct activities that most significantly impact the VIE's economic performance. Although the equity holders establish the terms of the lease agreement, the terms of the lease agreement do not provide the equity holders with the power to direct activities that most significantly impact the VIE's economic performance. ##### [810-10-55-180](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-180) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:35497ca27ba67d077800f237db66b81529abb4de11662135fcc9616824d45cc2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a reporting entity has the power to direct the activities of a VIE that most significantly impact the VIE's economic performance, then under the requirements of paragraph [810-10-25-38A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A), that reporting entity also is required to determine whether it has the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The lessee has both the obligation to absorb losses that could potentially be significant to the VIE and the right to receive benefits that could potentially be significant to the VIE through the residual value guarantee and the purchase option, respectively. ##### [810-10-55-181](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-181) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:afdd6418859071bff30c48a5473961c14c53d62fcf6dab5df8723ef131501e88 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On the basis of the specific facts and circumstances presented in this Case and the analysis performed, the lessee would be deemed the primary beneficiary of the VIE because: 1. a It is the variable interest holder with the power to direct the activities of the VIE that most significantly impact the VIE's economic performance. 2. b Through its residual value guarantee and purchase option, it has the obligation to absorb losses of the VIE that could potentially be significant to the VIE and the right to receive benefits from the VIE that could potentially be significant to the VIE. ##### [810-10-55-182](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-182) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:bd55bd98f076f4eeaf281cf57420e6de16280948b07790f55e1b7adc6b304d7e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Cases illustrate the application of the guidance in paragraphs [810-10-25-38A through 25-38J](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A) related to the determination of the entity that has the power to direct the activities of the VIE that most significantly impact the VIE's economic performance. 1. a Joint decision making, different activities (Case H1) 2. b Separate decision making, different activities (Case H2) 3. c Separate decision making, same activities (Case H3) 4. d Separate decision making, similar and different activities (Case H4). ##### [810-10-55-183](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-183) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:73cc87d4f46edaa3c6ea123d75e9ce97dc45d4ded23a5c6df95a81309d69377a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Each of the Cases share the following assumptions: 1. a Reporting Entity A and Reporting Entity B form a VIE to manufacture, distribute, and sell a beverage. The VIE is funded with $95 million of 20-year fixed-rate debt and $5 million of equity. The debt is widely dispersed among third-party investors. The equity is held by Reporting Entity A and Reporting Entity B. Reporting Entity A and Reporting Entity B are not related parties. 2. b Reporting Entity A and Reporting Entity B each have 50 percent of the voting rights and each represents 50 percent of the board of directors. 3. c Reporting Entity A is a beverage manufacturer and distributor. Reporting Entity B is also a beverage manufacturer and distributor. ##### [810-10-55-184](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-184) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:287e4a65e73fe03affc8eddb52a151120b20162e76384bdeec906f74684c7a20 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Reporting Entity A is responsible for manufacturing the beverage. Reporting Entity B is responsible for distributing and selling the beverage. Decisions about the manufacturing, distributing, and selling of the beverage require the consent of both Reporting Entity A and Reporting Entity B. All other decisions about the VIE are jointly decided by Reporting Entity A and Reporting Entity B through their voting interests and equal board representation. Any matters that cannot be resolved or agreed upon must be resolved through a third-party arbitration process. ##### [810-10-55-185](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-185) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:f72e27497e0010c496882115e1f790cea4c45668d1475f605f937fdd0910c4b3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To evaluate the facts and circumstances and determine which reporting entity, if any, is the primary beneficiary of a VIE, paragraph [810-10-25-38A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A) requires that a reporting entity determine the purpose and design of the VIE, including the risks that the VIE was designed to create and pass through to its variable interest holders. In making this assessment, the variable interest holders of the VIE determined that the primary purpose for which the VIE was created was to provide Reporting Entity A with access to Reporting Entity B's distribution and sales network and for Reporting Entity B to gain access to Reporting Entity A's manufacturing process and technology. ##### [810-10-55-186](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-186) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:e06e9d7e29a9115face36358bfcea04c893d4233a13660da7f1af24750d06d2b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Reporting Entity A and Reporting Entity B (through their equity investment) and the debt investors are the variable interest holders in the VIE. ##### [810-10-55-187](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-187) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:004717a5de60da17aca925221c474eac7f4d0caaae11087bca94bdf004b24937 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [810-10-25-38B](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38B) requires that a reporting entity identify which activities most significantly impact the VIE's economic performance and determine whether it has the power to direct those activities. The economic performance of the VIE is significantly impacted by the manufacturing of the beverage and by the selling and distributing of the beverage. Thus, the activities that significantly impact the VIE's economic performance are the activities that significantly impact the manufacturing of the beverage and the selling and distributing of the beverage. ##### [810-10-55-188](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-188) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:31aa1ce811242123dabd4462bc3a0644cf226e396dfdb852c0c51f87ab849400 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [810-10-25-38D](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38D) provides that if a reporting entity determines that power is, in fact, shared among multiple parties such that no one party has the power to direct the activities of a VIE that most significantly impact the VIE's economic performance, then no party is the primary beneficiary. Power is shared if two or more unrelated parties together have the power to direct the activities of a VIE that most significantly impact the VIE's economic performance, and if decisions about those activities require the consent of each of the parties sharing power. ##### [810-10-55-189](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-189) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:9844bfb23e40887648c441af848652f881a085ba45321a3739f9f7a92b808402 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Reporting Entity A and Reporting Entity B share the power to direct the activities that will most significantly impact the economic performance of the VIE through their ability to make decisions about the manufacturing, distributing, and selling of the beverage and because of the fact that those decisions require each party's consent. ##### [810-10-55-190](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-190) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:2675967f7f018d4d9f94459467450151541083f1e87279718d34afc8dba7c25f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The debt holders of the VIE have no voting rights and no other rights that provide them with the power to direct the activities that most significantly impact the VIE's economic performance. ##### [810-10-55-191](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-191) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:339974b01f691cb3344ab9293f8c886889c94e64036a25d99cb45aec4f4c6306 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a reporting entity has the power to direct the activities of a VIE that most significantly impact the VIE's economic performance, then under the requirements of paragraph [810-10-25-38A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A), that reporting entity also is required to determine whether it has the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. Reporting Entity A and Reporting Entity B both have the obligation to absorb losses and the right to receive benefits that could potentially be significant to the VIE through their equity interests. ##### [810-10-55-192](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-192) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:8fbd42350c8cd2044e944c58131b7f0de3c84971371197b097822093137395d2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On the basis of the specific facts and circumstances presented in this Case and the analysis performed, the VIE does not have a primary beneficiary because the power to direct the activities of the VIE that most significantly impact the VIE's economic performance, is, in fact, shared among multiple parties (Reporting Entity A and Reporting Entity B) such that no one party has the power to direct the activities of the VIE that most significantly impact the VIE's economic performance. ##### [810-10-55-193](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-193) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:fe3d61e4c4fcd989035ece643c185d81b070e532e7bafaff0f14dcecec254c60 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume that decisions about the manufacturing, distributing, and selling of the beverage do not require the consent of both Reporting Entity A and Reporting Entity B. Each reporting entity would be required to identify which activities most significantly impact the VIE's economic performance and determine whether it has the power to direct those activities. The party with the power to direct those activities would be the primary beneficiary of the VIE. Because decisions about these activities do not require the consent of both Reporting Entity A and Reporting Entity B, power would not be considered shared, and either Reporting Entity A or Reporting Entity B would be the primary beneficiary of the VIE, on the basis of which party has the power to direct the activities of the VIE that most significantly impact the VIE's economic performance. ##### [810-10-55-194](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-194) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:93afcb403c579bbdd1af9fe0545b7c8e3c01412fe492a1a63674528473fce7e6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume that Reporting Entity A and Reporting Entity B each manufacture, distribute, and sell the beverage in different locations, but decisions about these activities do not require the consent of both Reporting Entity A and Reporting Entity B. That is, each reporting entity is responsible for the same activities. Because decisions about these activities do not require the consent of both Reporting Entity A and Reporting Entity B, power would not be considered shared. ##### [810-10-55-195](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-195) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:7cab6b618c0f94276741c64472797be731a4238b510f37ebdec2e679f1d4e8eb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a reporting entity concludes that power is not shared but the activities that most significantly impact the VIE's economic performance are directed by multiple unrelated parties and the nature of the activities that each party is directing is the same, the party, if any, with the power over the majority of those activities shall be considered to have the power to direct the activities of a VIE that most significantly impact the VIE's economic performance. If no party directs the majority of those activities, the VIE does not have a primary beneficiary. ##### [810-10-55-196](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-196) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:72bcf0096c64894f99974c876b59b998b8993852f77360c5a303664e68232a38 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If Reporting Entity A or Reporting Entity B has power over the majority of those activities, then that party would be the primary beneficiary of the VIE. ##### [810-10-55-197](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-197) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:5ec312eb7ab3e2f5431e34cce3050e4466ec06d4a7ceae5b0c3667d82dd3b623 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume that Reporting Entity A and Reporting Entity B are each responsible for manufacturing the beverage, but Reporting Entity B is also responsible for all of the distributing and selling of the beverage, and decisions about the manufacturing, distributing, and selling of the beverage do not require the consent of both Reporting Entity A and Reporting Entity B. Each reporting entity would be required to identify which activities most significantly impact the VIE's economic performance and determine whether it has the power to direct those activities. The party with the power to direct those activities would be the primary beneficiary of the VIE. That is, power would not be considered shared, and either Reporting Entity A or Reporting Entity B would be the primary beneficiary of the VIE. However, if a reporting entity concludes that power is not shared but the activities that most significantly impact the VIE's economic performance are directed by multiple unrelated parties and the nature of the activities that each party is directing is the same, the party, if any, with the power over the majority of those activities shall be considered to have the power to direct the activities of a VIE that most significantly impact the VIE's economic performance. If no party directs the majority of those activities, the VIE does not have a primary beneficiary. ##### [810-10-55-198](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-198) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:4905aef4eb4fa7a6d0fcbaa7b1e119c336f200b9b6f0adc5ecbf5e5111a5d096 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Reporting Entity B may conclude that its power over some of the manufacturing of the beverage, combined with its power over all of the distributing and selling of the beverage, results in its being the party with the power to direct the activities that most significantly impact the VIE's economic performance. However, if Reporting Entity B were to conclude that the distributing and selling of the beverage did not significantly impact the economic performance of the VIE, then the primary beneficiary of the VIE would be the party, if any, with the power over the majority of the manufacturing of the beverage. ##### [810-10-55-199](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-199) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:4c7033800b87f69bb40fc38ecbe374c820f35bd48b39f1f3039ff53edac33bfb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A VIE is created by a furniture manufacturer and a financial investor to manufacture and sell wood furniture to retail customers in a particular geographic region. The VIE was created because the furniture manufacturer has no viable distribution channel in that particular geographic region. The VIE is established with $100 of equity, contributed by the furniture manufacturer, and $3 million of 10-year fixed-rate debt, provided by a financial investor. The furniture manufacturer establishes the sales and marketing strategy of the VIE, manages the day-to-day activities of the VIE, and is responsible for preparing and implementing the annual budget for the VIE. The VIE has a distribution contract with a third party that does not represent a variable interest in the VIE. Interest is paid to the fixed-rate debt holder (the financial investor) from operations before funds are available to the equity holder. The furniture manufacturer has guaranteed the fixed-rate debt to the financial investor. The debt agreement includes a clause such that if there is a materially adverse change that materially impairs the ability of the VIE and the furniture manufacturer to pay the debt, then the financial investor can take possession of all the assets of the VIE. An independent third party must objectively determine whether a materially adverse change has occurred on the basis of the terms of the debt agreement (an example of a materially adverse change under the debt agreement is the bankruptcy of the VIE). ##### [810-10-55-200](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-200) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:e2677ea102aae110dc9569c9be99d655c16c3ba405bc5a15275a7a49ee825e73 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To evaluate the facts and circumstances and determine which reporting entity, if any, is the primary beneficiary of a VIE, paragraph [810-10-25-38A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A) requires that a reporting entity determine the purpose and design of the VIE, including the risks that the VIE was designed to create and pass through to its variable interest holders. In making this assessment, the variable interest holders of the VIE determined the following: 1. a The primary purpose for which the VIE was created was to enable the furniture manufacturer to extend its existing business line into a particular geographic region that lacked a viable distribution channel. 2. b The VIE was marketed to the financial investor as a fixed-rate investment in a retail operating entity, supported by the furniture manufacturer's expertise and guarantee. 3. c The furniture manufacturer's guarantee of the debt effectively transfers all of the operating risk of the VIE to the furniture manufacturer. ##### [810-10-55-201](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-201) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:8f2c4add72494683867d4abb8da0285c03fd0a2bab0344d40917fa82a76dbfba Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The furniture manufacturer and the financial investor (debt holder) are the variable interest holders in the VIE. ##### [810-10-55-202](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-202) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:72ad2be01b15418e67bda2c82e22c0f7879450b57a068d9f0dd1d6e9251db325 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [810-10-25-38B](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38B) requires that a reporting entity identify which activities most significantly impact the VIE's economic performance and determine whether it has the power to direct those activities. The economic performance of the VIE is most significantly impacted by the operations of the VIE because the operating cash flows of the VIE are used to repay the financial investor. Thus, the activities that most significantly impact the VIE's economic performance are the operating activities of the VIE. The furniture manufacturer has the ability to establish the sales and marketing strategy of the VIE and manage the day-to-day activities of the VIE. ##### [810-10-55-203](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-203) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:7bbb14921e6c3eab109d9615cb01a528810bc7f5e50ee3a6e34c773b6ebf98c5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The debt holder has the power to take possession of all of the assets of the VIE if there is a materially adverse change under the debt agreement. However, the debt holder's rights under the materially adverse change clause represent [protective rights](https://asc.understandingaccounting.org/glossary/p/#protective-rights-vie-definition "Rights designed to protect the interests of the party holding those rights without giving that party a controlling financial interest in the entity to which they relate. For example, they include any of the following: Approval or veto rights granted to other parties that do not affect the activities that most significantly impact the entity's economic performance. Protective rights often apply to fundamental changes in the activities of an entity or apply only in exceptional circumstances. Examples include both of the following: A lender might have rights that protect the lender from the risk that the entity will change its activities to the detriment of the lender, such as selling important assets or undertaking activities that change the credit risk of the entity. Other interests might have the right to approve a capital expenditure greater than a particular amount or the right to approve the issuance of equity or debt instruments. The ability to remove the reporting entity that has a controlling financial interest in the entity in circumstances such as bankruptcy or on breach of contract by that reporting entity. Limitations on the operating activities of an entity. For example, a franchise agreement for which the entity is the franchisee might restrict certain activities of the entity but may not give the franchisor a controlling financial interest in the franchisee. Such rights may only protect the brand of the franchisor."). Protective rights held by other parties do not preclude a reporting entity from having the power to direct the activities of a VIE that most significantly impact the VIE's economic performance. Protective rights are designed to protect the interests of the party holding those rights without giving that party a controlling financial interest in the VIE to which they relate. The debt holder's rights protect the interests of the debt holder; however, the VIE's economic performance is most significantly impacted by the activities over which the furniture manufacturer has power. The debt holder's protective rights do not prevent the furniture manufacturer from having the power to direct the activities of the VIE that most significantly impact the VIE's economic performance. ##### [810-10-55-204](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-204) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:9ceb908410c37bbc642de129799fb6a374e3545bc562c80c235a37578fbd4310 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a reporting entity has the power to direct the activities of a VIE that most significantly impact the VIE's economic performance, then under the requirements of paragraph [810-10-25-38A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A), that reporting entity also is required to determine whether it has the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits that could potentially be significant to the VIE. The furniture manufacturer has the obligation to absorb losses that could potentially be significant through its equity interest and debt guarantee and the right to receive benefits that could potentially be significant through its equity interest. ##### [810-10-55-205](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:40304a1ec7554eb6b8c82b8e8db3cf4109da0dcb033b18d9d08fd7a14601d91d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On the basis of the specific facts and circumstances presented in this Case and the analysis performed, the furniture manufacturer would be the primary beneficiary of the VIE because: 1. a It is the variable interest holder with the power to direct the activities of the VIE that most significantly impact the VIE's economic performance. 2. b Through its equity interest and debt guarantee, it has the obligation to absorb losses of the VIE that could potentially be significant to the VIE and the right to receive benefits from the VIE that could potentially be significant to the VIE. ##### [810-10-55-205A](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205A) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:40fa5733086f7a99a9c2951e824d79812f65e8f60addeca4b63cb91107ca2059 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph moved to [810-10-55-205AJ](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AJ). ##### [810-10-55-205B](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205B) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:715304ffe9589111ded7616eb9f5a7a9459092183559b22ea03bc6afde434761 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph moved to [810-10-55-205AK](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AK). ##### [810-10-55-205C](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205C) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:7d04d0c7c6cb8c1e5035e097c215ecf779e8797528b7922325fa5d0686432d81 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph moved to [810-10-55-205AL](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AL). ##### [810-10-55-205D](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205D) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:31a0b101a3fa39ccf558aa9cb63448c831059aeadbe02948119cb7c76e914d85 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph moved to [810-10-55-205AM](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AM). ##### [810-10-55-205E](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205E) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:d27a8e34b5858047c2da031241b5bb7e46bf0c9e8e5c3fa25bd9ea545b16fea6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph moved to [810-10-55-205AN](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AN). ##### [810-10-55-205F](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205F) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:840ac42e038ea0e66f43965a833c9620ea88534117a15ad2a017fc84af953191 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph moved to [810-10-55-205AO](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AO). ##### [810-10-55-205G](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205G) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:6ad1385dd225c2b03b7811cfe24fa29a8dd412518a36b8e88b37790d514cd608 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph moved to [810-10-55-205AP](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AP). ##### [810-10-55-205H](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205H) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:db6bb1b0d19b230f16ecacd90221b37258b37a387bbd8135fd24fa5f902e0d3d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph moved to [810-10-55-205AQ](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AQ). ##### [810-10-55-205I](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205I) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:d05048a642f0041deb639128a3b1020ce583e7f1c2076775295c672fac2eb1d1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph moved to [810-10-55-205AR](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AR). ##### [810-10-55-205J](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205J) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:3f3ea655eafe384327feb9c938355097e3e0f2588cf3ba74af4b726e861ea218 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph moved to [810-10-55-205AS](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AS). ##### [810-10-55-205K](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205K) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:df929c1c6ee4aada79a8cb44815a3d5b152c78acd57be46ca423931dba407f43 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph moved to [810-10-55-205AT](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AT). ##### [810-10-55-205L](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205L) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:29d9820a7a25f97398163e57d54bf166e47f7a1d6786689d8a5cafe2e51467f3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A fund manager (general partner) creates and sells partnership interests in an investment fund (limited partnership) to external investors (limited partners). The partnership interests were marketed to the limited partners as an opportunity to generate returns by allowing the general partner to have discretion to determine how to invest the fund's assets provided that the investments are consistent with the defined parameters and objectives set forth in the limited partnership agreement. The general partner is not liable for any losses beyond the interest that the general partner owns in the fund. The general partner's ownership interests in the fund are expected to absorb more than an insignificant amount of the fund's expected losses and receive more than an insignificant amount of the fund's expected residual returns. ##### [810-10-55-205M](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205M) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:4e498f795ba207b0b446bed7a560909cc9e339922cd753d32ce11c1bf99e1cd8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The individual limited partners do not hold any substantive rights that would affect the [decision-making authority](https://asc.understandingaccounting.org/glossary/d/#decision-making-authority "The power to direct the activities of a legal entity that most significantly impact the entity's economic performance according to the provisions of the Variable Interest Entities Subsections of Subtopic 810-10.") of the general partner, but they can redeem their interests within particular limits set forth by the fund. The limited partners do not have either of the following abilities: 1. a The ability to remove the general partner from its decision-making authority or to dissolve (liquidate) the fund [without cause](https://asc.understandingaccounting.org/glossary/w/#without-cause "Without cause means that no reason need be given for the dissolution (liquidation) of the limited partnership or removal of the general partners.") (as distinguished from [with cause](https://asc.understandingaccounting.org/glossary/w/#with-cause "With cause generally restricts the limited partners' ability to dissolve (liquidate) the limited partnership or remove the general partners in situations that include, but that are not limited to, fraud, illegal acts, gross negligence, and bankruptcy of the general partners.")) 2. b The ability to block or participate in certain significant financial and operating decisions of the limited partnership that are 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."). ##### [810-10-55-205N](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205N) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:2841ff3921fba2b860b938790e5af9a2e50ff8b9a574ff011a16378aaf6fc3a1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The at-risk equity holders (as a group) do not have the ability to direct the activities that most significantly impact the economic performance of the fund on the basis of paragraph [810-10-55-205M(a) through (b)](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205M). Therefore, the fund is a VIE because the condition in paragraph [810-10-15-14(b)(1)(ii)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14) is met. ##### [810-10-55-205O](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205O) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:49b45586e30625e845a8cec2d0d292ae39092c40a0fa1d9dfb2044cd59cefa74 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The general partner is paid an annual fixed fee for the assets under management and a performance-based fee based on the fund's profits if it achieves a specified annual profit level. The annual and performance-based fees paid to the general partner are both of the following: 1. a Compensation for services provided and commensurate with the level of effort required to provide those services 2. b Part of a compensation arrangement that includes only terms, conditions, or amounts that are customarily present in arrangements for similar services negotiated at arm's length. ##### [810-10-55-205P](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205P) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:a36ea66e6ed0a3d34fccf5b9a4e79c16032dea9d7659a39b6f2eddad5b70a1e9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To evaluate the facts and circumstances and determine which reporting entity, if any, is the primary beneficiary of a VIE, paragraph [810-10-25-38A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A) requires that a reporting entity determine the purpose and design of the VIE, including the risks that the VIE was designed to create and pass through to its variable interest holders. In making this assessment, the variable interest holders of the VIE determined all of the following: 1. a The fund is designed to provide limited partners with exposure to the risks and returns of the fund. 2. b The fund was marketed to potential investors as an investment in a pool of securities with exposure to specific enterprise risks, market liquidity, and general market volatility of the investments. The limited partners have granted the general partner power to direct the activities that most significantly impact the VIE's economic performance, which include management of their invested capital, on the basis of the prior performance of the general partner. 3. c The fee structure is designed to provide greater compensation to the general partner if the fund generates returns for the third-party limited partners that are above the specified profit level. The specified profit level is based on the activities of the fund and the nature of the fund's assets. While the general partner's fee structure may provide an incentive for the general partner to take additional risk to realize its performance-based fee, the annual and performance-based fees are designed to do all of the following: 1. 1 Provide compensation to the general partner for its services that is commensurate with the level of effort required to provide the services 2. 2 Include only terms, conditions, or amounts that are customarily present in arrangements for similar services negotiated at arm's length. ##### [810-10-55-205Q](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205Q) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:aa8cb95ed662ba02e0dd5890fc62c0f9e83c2a35f31dab7a20ce0ac6fb34b63a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The general partner and the limited partners are the variable interest holders in the VIE. The fees paid to the general partner (in its role as fund manager) represent a variable interest on the basis of a consideration of the conditions in paragraphs [810-10-55-37 through 55-38](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-37) , specifically paragraph [810-10-55-37(c)](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-37), because of the general partner holding ownership interests that are expected to absorb more than an insignificant amount of the fund's expected losses and receive more than an insignificant amount of the fund's expected residual returns. If the general partner was only receiving fees and did not hold ownership interests and if its related parties did not hold any variable interests in the VIE, then the fees would not be a variable interest. ##### [810-10-55-205R](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205R) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:c872ee546d1d0f14f9ee5f91c4f6299adade74c0c97cf7766f7666afc3aa0ffa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [810-10-25-38B](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38B) requires that a reporting entity identify which activities most significantly impact the VIE's economic performance and determine whether it has the power to direct those activities. The economic performance of the VIE is most significantly impacted by the performance of the VIE's managed securities portfolio. Thus, the activities that most significantly impact the VIE's economic performance are the activities that significantly impact the performance of the managed securities portfolio. ##### [810-10-55-205S](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205S) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:596dd7e9675750da97255d37ff8a44898000142dffe2271f5c17e68bcc60516d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The general partner manages the operations of the VIE. Specifically, the general partner establishes the terms of the VIE, approves the assets to be purchased and sold by the VIE, and administers the VIE by monitoring the assets and ensuring compliance with the VIE's investment policies. The fact that the general partner was significantly involved with the creation of the VIE does not, in isolation, result in the general partner being the primary beneficiary of the VIE. However, the fact that the general partner was involved with the creation of the VIE may indicate that the general partner had the opportunity and the incentive to establish arrangements that result in the general partner being the variable interest holder with the power to direct the activities that most significantly impact the VIE's economic performance. ##### [810-10-55-205T](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205T) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:997abc5f0760114e62ea822202719c758d8bfbc3259b2b9d91d46f6dd8d67299 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The limited partners of the VIE have no voting rights and no other rights that provide them with the power to direct the activities that most significantly impact the VIE's economic performance. ##### [810-10-55-205U](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205U) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:b6ab0baafc55706bccd7c5508a90823d40b473f0186e6a4721d604518033da93 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a reporting entity has the power to direct the activities of a VIE that most significantly impact the VIE's economic performance, then under the requirements of paragraph [810-10-25-38A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A), that reporting entity also is required to determine whether it has the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The annual and performance-based fees paid to the general partner are both of the following: 1. a Compensation for services provided and commensurate with the level of effort required to provide those services 2. b Part of a compensation arrangement that includes only terms, conditions, or amounts that are customarily present in arrangements for similar services negotiated at arm's length. Therefore, the annual and performance-based fees meet the criteria in paragraph [810-10-25-38H](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38H) and should not be considered for purposes of evaluating the characteristic in paragraph [810-10-25-38A(b)](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A). Additionally, the general partner, through its investment in the fund, has the obligation to absorb losses of the VIE that could potentially be significant to the VIE and the right to receive benefits from the VIE that could potentially be significant to the VIE. ##### [810-10-55-205V](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205V) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:4206e49b2afe901903024b8d0e1ecbdbdd630ffd99ad0637effba896a7bed135 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On the basis of the specific facts and circumstances presented in this Case and the analysis performed, the general partner would be the primary beneficiary of the VIE because: 1. a It is the variable interest holder with the power to direct the activities of the VIE that most significantly impact the VIE's economic performance. 2. b Through its investment in the fund, it has the obligation to absorb losses of the VIE that could potentially be significant to the VIE and the right to receive benefits from the VIE that could potentially be significant to the VIE. ##### [810-10-55-205W](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205W) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:d3ab529e1185cbe3fcfb1b003e4899cb3ad68a1aa2cbb607893ef76eb0032c0e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A fund manager (general partner) creates and sells partnership interests in an investment fund (limited partnership) to external investors (limited partners). The partnership interests were marketed to the investors as an opportunity to generate significant returns by allowing the general partner to have discretion to determine how to invest the fund's assets provided that the investments are consistent with the defined parameters and objectives set forth in the limited partnership agreement. None of the limited partners are related parties of the general partner. The general partner does not hold any interests in the fund, and the general partner is not liable for any losses in the fund. Several employees of the general partner have interests in the fund. These employees chose to purchase interests in the fund and financed the purchases themselves. ##### [810-10-55-205X](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205X) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:ee78807d4668c8b7a50437a1caca1ceb74b02654536d4521698a8fc15684ac3f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The annual and performance-based fees paid to the general partner are both of the following: 1. a Compensation for services provided and commensurate with the level of effort required to provide those services 2. b Part of a service arrangement that includes only terms, conditions, or amounts that are customarily present in arrangements for similar services negotiated at arm's length. Additionally, the general partner has no related parties with interests in the fund that individually, or in the aggregate, would absorb more than an insignificant amount of the fund's expected losses or receive more than an insignificant amount of the fund's expected residual returns. For purposes of this assessment, the general partner did not include its employees' interests in the fund because the general partner did not finance those interests; therefore, the general partner has neither a direct nor an indirect economic interest in the fund. The general partner's annual and performance-based fees do not represent a variable interest on the basis of a consideration of the conditions in paragraphs [810-10-55-37 through 55-38](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-37) . ##### [810-10-55-205Y](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205Y) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:a4c31e2ddcd6c5b47c12a5a4f323deff1d818e31a4b039177d1ead62fc116ee1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On the basis of the specific facts and circumstances presented in this Case and the analysis performed, the general partner does not have a variable interest in the fund. The general partner has no further consolidation analysis to perform. ##### [810-10-55-205Z](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205Z) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:2ef09f2a5633dce7838492bcd9eeed2ca34f4d9ec4213872962572f3ec9528f3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Company B, an affiliate of Company A, owns certain intellectual property related to eCommerce activities. Company A establishes a VIE to which Company A provides an exclusive services and asset licensing agreement. The VIE obtains access to the intellectual property owned by Company B. Company A agrees to provide strategic and technical services to the VIE and contracts with Company B to perform these services. Company B, Company A, and the VIE share the same senior management. ##### [810-10-55-205AA](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AA) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:6a32e211016597bce82ec995128d70f00940a2615b5147ddbd2c234cdd477692 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because of regulatory restrictions, Company A and its investors are precluded from owning equity in the VIE. The VIE is domiciled in a different country, which prohibits foreign investment through equity. ##### [810-10-55-205AB](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AB) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:2e43f94c8d956b239bafc7cd9f345b009b7c95a44058a5fd0e05c78c2cc6c088 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The equity investors in the VIE, who are the senior management of Company A, have rights that are limited to only administrative matters. ##### [810-10-55-205AC](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AC) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:7f8b738ecc4df14bde4a64ff99d6ff9726b33de5cf547a559c934cb144917787 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Company A's compensation for the services and asset licensing agreement is the net income of the VIE, but not the VIE's net losses. The fees paid to Company A are both of the following: 1. a Compensation for services provided but not commensurate with the level of effort required to provide those services 2. b Part of a service arrangement that does not include only terms, conditions, or amounts that are customarily present in arrangements for similar services negotiated at arm's length. ##### [810-10-55-205AD](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AD) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:6c3cd42c07861fe2b6f9890bbab1eedbe11417da3bddaca4dd6b0410a45f01a0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To evaluate the facts and circumstances and determine which reporting entity, if any, is the primary beneficiary of a VIE, paragraph [810-10-25-38A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A) requires that a reporting entity determine the purpose and design of the VIE, including the risks that the VIE was designed to create and pass through to its variable interest holders. In making this assessment, the variable interest holders of the VIE determined the following: 1. a The primary purpose for the creation of the VIE was to bypass foreign investment restrictions and enable foreign investors (through their ownership of Company A) to participate indirectly in restricted sectors in which Company B operates through a series of contractual arrangements. 2. b Company A will receive all of the net income but none of the net losses of the VIE. 3. c The equity investors, the senior management of Company A, are exposed to the net losses of the VIE through their equity investments. ##### [810-10-55-205AE](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AE) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:528fe34e4ba208e521abb8dce1f01ae6b6f4e1cb93374d17835e95362ab7fa42 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Company A and the equity investors of the VIE are the variable interest holders in the VIE. The fees paid to Company A represent a variable interest on the basis of consideration of the conditions in paragraphs [810-10-55-37 through 55-38](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-37) , specifically paragraph [810-10-55-37(a) and (d)](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-37). ##### [810-10-55-205AF](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AF) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:5c0466730363406cf670e2d842340cb01c3ac7ed5e44b360ae705180a9ca47a5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [810-10-25-38B](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38B) requires that a reporting entity identify which activities most significantly impact the VIE's economic performance and determine whether it has the power to direct those activities. The economic performance of the VIE is significantly impacted by the performance of Company B. Company A, through its contractual arrangements, has the power to direct the activities that most significantly impact the VIE's economic performance. ##### [810-10-55-205AG](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AG) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:3d831b20db753acfe347f05c770390f6f34331c86a32373aa223cbf4ecffff49 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The equity investors of the VIE have no voting rights and no other rights that provide them with the power to direct the activities that most significantly impact the VIE's economic performance. ##### [810-10-55-205AH](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AH) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:1c3e63a58683b86d2d03d6307531dee7b219adb6930ec33a66a47f23013d007c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a reporting entity has the power to direct the activities of a VIE that most significantly impact the VIE's economic performance, then under the requirements of paragraph [810-10-25-38A](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A), that reporting entity also is required to determine whether it has the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. Company A, through its fee arrangements, receives benefits that could potentially be significant to the VIE. The fees paid to Company A are both of the following: 1. a Compensation for services provided but not commensurate with the level of effort required to provide those services 2. b Part of a service arrangement that does not include only terms, conditions, or amounts that are customarily present in arrangements for similar services negotiated at arm's length. Therefore, the fees do not meet the criteria in paragraph [810-10-25-38H](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38H), and they should be considered for purposes of paragraph [810-10-25-38A(b)](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-38A). ##### [810-10-55-205AI](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AI) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:13b563bc7ae2c83b62f5567b85b1105879a0f17d4b9b4c7e298ed14b12289597 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On the basis of the specific facts and circumstances presented in this Case and the analysis performed, Company A would be deemed to be the primary beneficiary of the VIE because: 1. a It is the variable interest holder with the power to direct the activities of the VIE that most significantly impact the VIE's economic performance. 2. b Through fee arrangements, it has the right to receive benefits from the VIE that could potentially be significant to the VIE. ##### [810-10-55-205AJ](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AJ) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:88ccd961b8d0077f2724376f0a2e851ce517db040ed2afea4b864134ab834af6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-17](https://asc.understandingaccounting.org/updates/asu-2018-17/). ##### [810-10-55-205AK](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AK) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:3d0cb8cb732bb3d35972d74fdc93c616710fe221fc6a7a5aea14fffd8a5276d2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-17](https://asc.understandingaccounting.org/updates/asu-2018-17/). ##### [810-10-55-205AL](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AL) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:39e43480f299bf9314313002cc308dc9ee06addee7346e32dd8ed1777bad5d92 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-17](https://asc.understandingaccounting.org/updates/asu-2018-17/). ##### [810-10-55-205AM](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AM) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:6873ef288fa67636a8ebc728d3b28b13a59d37288960f73956eb7cab45415fa8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-17](https://asc.understandingaccounting.org/updates/asu-2018-17/). ##### [810-10-55-205AN](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AN) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:765251fb880d159409893674ae84f56f70de3bfaef49f0dce810f3bb29bd292c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-17](https://asc.understandingaccounting.org/updates/asu-2018-17/). ##### [810-10-55-205AO](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AO) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:fa2e8a220308873d157e3cb79e586ea3b280cb08420db928a42d3e5a0d0ace24 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-17](https://asc.understandingaccounting.org/updates/asu-2018-17/). ##### [810-10-55-205AP](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AP) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:dd79776c99758e894a8d9c5571e01a19e1fc2fbf9927b1d1400a5e39d0a97d25 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-17](https://asc.understandingaccounting.org/updates/asu-2018-17/). ##### [810-10-55-205AQ](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AQ) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:ec3c6d10bb501efce0fbe24f5098575fb6d4a9567c71c501c77ad8e799b8c078 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-17](https://asc.understandingaccounting.org/updates/asu-2018-17/). ##### [810-10-55-205AR](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AR) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:2f6d3b4f6a53a2574cf7e266049f8bc3440589ef4cc6e9abe76e7f9017fb8558 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-17](https://asc.understandingaccounting.org/updates/asu-2018-17/). ##### [810-10-55-205AS](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AS) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:f2b7eec2712a2edf6d3a9c707d3043656e479061da2f4404bd82d23274d56324 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A reporting entity has determined that it must consolidate a [collateralized financing entity](https://asc.understandingaccounting.org/glossary/c/#collateralized-financing-entity "A variable interest entity that holds financial assets, issues beneficial interests in those financial assets, and has no more than nominal equity. The beneficial interests have contractual recourse only to the related assets of the collateralized financing entity and are classified as financial liabilities. A collateralized financing entity may hold nonfinancial assets temporarily as a result of default by the debtor on the underlying debt instruments held as assets by the collateralized financing entity or in an effort to restructure the debt instruments held as assets by the collateralized financing entity. A collateralized financing entity also may hold other financial assets and financial liabilities that are incidental to the operations of the collateralized financing entity and have carrying values that approximate fair value (for example, cash, broker receivables, or broker payables).") under this Topic and is eligible to and has elected to apply the measurement alternative in paragraphs [810-10-30-10 through 30-15](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-10) and [810-10-35-6 through 35-8](https://asc.understandingaccounting.org/asc/810/10/#810-10-35-6) . The reporting entity retains certain [beneficial interests](https://asc.understandingaccounting.org/glossary/b/#beneficial-interests "Rights to receive all or portions of specified cash inflows received by a trust or other entity, including, but not limited to, all of the following: Senior and subordinated shares of interest, principal, or other cash inflows to be passed-through or paid-through Premiums due to guarantors Commercial paper obligations Residual interests, whether in the form of debt or equity.") in the collateralized financing entity as compensation for its services and also retains other beneficial interests. Since initial consolidation, the collateralized financing entity has not settled any of the outstanding beneficial interests related to compensation for services. The collateralized financing entity's only assets are corporate debt obligations, and its only liabilities (the beneficial interests issued by the collateralized financing entity) are thinly traded. The reporting entity determines that the fair value of the collateralized financing entity's financial assets is more observable than the fair value of its financial liabilities. Because the fair value of the financial assets is more observable, the reporting entity determines the amount of the financial liabilities of the collateralized financing entity (other than those beneficial interests retained by the reporting entity) as follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-282F0A76-1D89-480B-8B55-ADBF139814DB-low.gif) "June 20, 20X4 (Measurement upon Initial Consolidation)" "December 31, 20X4" Fair value of the financial assets(a) $100 $105 Plus: Carrying value of the nonfinancial assets(b) 5 5 assets(a) Total value of the assets of the collateralized financing entity 105 110 Less: Fair value of the beneficial interests retained by the reporting entity (other than those that represent compensation for services)(c) 10 12 Less: Carrying value of the beneficial interests related to compensation for services(d) 6 8 Financial liabilities related to the collateralized financing entity in consolidation 89 90 Net assets related to the collateralized financing entity(e) $16 $20 Change in the net assets related to the collateralized financing entity(f) $4 Changes in the beneficial interests attributable to the reporting entity(f) $4 (a) "The financial assets include $5 and $10 at June 20, 20X4, and December 31, 20X4, respectively, of cash held by the collateralized financing entity. The carrying value of the cash and cash equivalents is equal to the fair value." (b) "To determine the financial liabilities of the collateralized financing entity, the reporting entity uses the sum of the fair value of the financial assets and the carrying value of the nonfinancial assets. The nonfinancial assets of the collateralized financing entity are measured in accordance with other Topics." (c) This amount represents the fair value of the beneficial interests retained by the reporting entity (other than those that represent compensation for services) determined in accordance with Topic 820. This amount is not included in the financial liabilities of the consolidated reporting entity because it does not represent an amount due to third-party beneficial interest holders. (d) The reporting entity has rights to a portion of the beneficial interests through its compensation arrangement. That amount is measured in accordance with other Topics. That amount is not included in the financial liabilities of the consolidated reporting entity because it does not represent an amount due to third-party beneficial interest holders. (e) "The net assets related to the collateralized financing entity equal the reporting entity's beneficial interests (that is, the sum of the fair value of the beneficial interests retained \[other than those that represent compensation\] and the carrying value of beneficial interests that represent compensation for services). The change in the net assets is included in the reporting entity's consolidated net income (loss)." (f) "The change in the net assets related to the collateralized financing entity equals the change in the value of the beneficial interests retained by the reporting entity, including the change in the carrying value of the beneficial interests representing compensation for services." ##### [810-10-55-205AT](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AT) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:4886e2feabce71d746b7292c4775d163877208b350437e2b3f1dc1c667a7cba7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A reporting entity has determined that it must consolidate a [collateralized financing entity](https://asc.understandingaccounting.org/glossary/c/#collateralized-financing-entity "A variable interest entity that holds financial assets, issues beneficial interests in those financial assets, and has no more than nominal equity. The beneficial interests have contractual recourse only to the related assets of the collateralized financing entity and are classified as financial liabilities. A collateralized financing entity may hold nonfinancial assets temporarily as a result of default by the debtor on the underlying debt instruments held as assets by the collateralized financing entity or in an effort to restructure the debt instruments held as assets by the collateralized financing entity. A collateralized financing entity also may hold other financial assets and financial liabilities that are incidental to the operations of the collateralized financing entity and have carrying values that approximate fair value (for example, cash, broker receivables, or broker payables).") under this Topic and is eligible to and has elected to apply the measurement alternative in paragraphs [810-10-30-10 through 30-15](https://asc.understandingaccounting.org/asc/810/10/#810-10-30-10) and [810-10-35-6 through 35-8](https://asc.understandingaccounting.org/asc/810/10/#810-10-35-6) . The reporting entity retains certain [beneficial interests](https://asc.understandingaccounting.org/glossary/b/#beneficial-interests "Rights to receive all or portions of specified cash inflows received by a trust or other entity, including, but not limited to, all of the following: Senior and subordinated shares of interest, principal, or other cash inflows to be passed-through or paid-through Premiums due to guarantors Commercial paper obligations Residual interests, whether in the form of debt or equity.") in the collateralized financing entity as compensation for its services and also retains other beneficial interests. Since initial consolidation, the collateralized financing entity has not settled any of the outstanding beneficial interests related to compensation for services. The collateralized financing entity's only assets are mortgages with primarily unobservable inputs, and its only liabilities are beneficial interests issued in those assets. The beneficial interests of the collateralized financing entity are frequently traded, although not in an active market. Because the fair value of the financial liabilities is more observable, the reporting entity determines the amount of the financial assets of the collateralized financing entity as follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-B3278BD5-11CC-476D-AF7C-EFEA4E0F2176-low.gif) "June 20, 20X4 (Measurement upon Initial Consolidation)" "December 31, 20X4" Fair value of the financial liabilities (other than beneficial interests retained by the reporting entity)(a) $90 $95 Plus: Fair value of the beneficial interests retained by the reporting entity (other than those that represent compensation for services)(b) 10 12 Plus: Carrying value of the beneficial interests related to compensation for services(c) 6 8 Total value of the financial liabilities of the collateralized financing entity(d) 106 115 Less: Carrying value of the nonfinancial assets(e) 5 5 Financial assets of the collateralized financing entity 101 110 Net assets related to the collateralized financing entity(f) $16 $20 Change in the net assets related to the collateralized financing entity(g) $4 Changes in the beneficial interests attributable to the reporting entity(g) $4 (a) "This amount reflects the fair value of the beneficial interests held by third parties in the consolidated financial statements. While any beneficial interests retained by the reporting entity are financial liabilities of the collateralized financing entity, such amounts are eliminated in consolidation because they do not represent amounts due to third-party beneficial interest holders. This amount also includes $6 and $8 at June 20, 20X4, and December 31, 20X4, respectively, of payables held by the collateralized financing entity for securities purchased but not yet settled. The carrying amount of those payables approximates fair value." (b) This amount represents the fair value of the beneficial interests retained by the reporting entity (other than those that represent compensation for services). (c) The reporting entity holds beneficial interests that represent compensation for services. This amount is measured in accordance with other Topics. (d) "The total liabilities of the collateralized financing entity include the beneficial interests held by third parties, the beneficial interests retained by the reporting entity, and any beneficial interests related to compensation. The reporting entity's beneficial interests (including those related to compensation) are financial liabilities of the collateralized financial entity that are eliminated in consolidation." (e) The nonfinancial assets of the collateralized financing entity are measured in accordance with other Topics. (f) "The net assets related to the collateralized financing entity equal the reporting entity's beneficial interests (that is, the sum of the fair value of the beneficial interests retained \[other than those that represent compensation\] and the carrying value of beneficial interests that represent compensation for services). The change in the net assets is included in the reporting entity's consolidated net income (loss)." (g) "The change in the net assets related to the collateralized financing entity equals the change in the value of the beneficial interests attributable to the reporting entity, including the change in the carrying value of the beneficial interests representing compensation for services." ##### [810-10-55-205AU](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AU) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:c2826d730646a68e4c88e4253356a1cfa7484065e444f99ecf6da9aa667cbea6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Examples illustrate the application of the guidance in paragraphs [810-10-15-17AD(a)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17AD) and [810-10-15-17AE](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17AE) on determining whether common control exists solely for purposes of applying the accounting alternative: 1. a Accounting Alternative—Common Control Exists (Example 11) 2. b Accounting Alternative—Common Control Does Not Exist (Example 12). ##### [810-10-55-205AV](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AV) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:0e3212c2e636b958c268cc8066e658602657f1fe6ddb06f7464639d3b47748b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume the following: 1. a Entities A (Parent), B (the reporting entity), C (a legal entity), and E (a legal entity) are all private companies. 2. b Entity A holds a majority of the voting shares of Entities B and C. 3. c Entity C holds a majority of the voting shares of Entity E. ##### [810-10-55-205AW](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AW) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:0eb72f475e5a9623c10fdb4fa68c3c9c13bed60bb5e151ce59aba54501ea80c2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Based on the guidance in paragraph [810-10-25-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-1), Entity A has a controlling financial interest in Entities B and C because it directly holds a majority of the voting shares in those entities and no circumstances indicate that control does not rest with the majority owner. Entity C also has a controlling financial interest in Entity E because it directly holds a majority of the voting shares in this entity. Therefore, Entity A controls Entity E through Entity C's controlling financial interest in Entity E. For the purposes of applying paragraph [810-10-15-17AD(a)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17AD), Entities B, C, and E are under common control of Entity A. Assuming the other criteria in paragraph [810-10-15-17AD](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17AD) are met, Entity B (the reporting entity) is eligible to apply the accounting alternative to Entity C and Entity E. ##### [810-10-55-205AX](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AX) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:682d931b6db4067ac616a63803c876c94dd4aa348a582fe5087c19af497c0051 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If Entity B directly holds a majority of the voting shares of Entity E and no circumstances indicate that control does not rest with the majority owner, Entity B would not be able to apply the accounting alternative to Entity E because paragraph [810-10-15-17AD(d)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17AD) would not be met. In other words, Entity B would conclude that it holds a controlling financial interest in Entity E when considering only the General Subsections of this Topic (and not the Variable Interest Entities Subsections). ##### [810-10-55-205AY](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AY) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:9728f2397dd0cfb162eb4d13810ada1e26bd8fced975d296265d641564b2e064 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume the following: 1. a Entities A (Parent), B (the reporting entity), C (a legal entity), and E (a legal entity) are all private companies. 2. b Entity A holds a majority of the voting shares of Entities B and C. 3. c Entities A, B, and C do not hold any voting shares of Entity E (directly or indirectly). However, Entity A has extended subordinated financial support (in the form of debt) to Entity E. ##### [810-10-55-205AZ](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205AZ) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:6ce9b66dcae228bb6f19f1a6f5c7aa633e607c31b5998cb284753e824b6e4fed Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Based on the guidance in paragraph [810-10-25-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-1), Entity A has a controlling financial interest in Entities B and C because it directly holds a majority of the voting shares in those entities and no circumstances indicate that control does not rest with the majority owner. Therefore, Entities B and C are under common control of Entity A. However, Entity E is not considered to be under common control of Entity A for the purposes of applying paragraph [810-10-15-17AD(a)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17AD) because Entity A does not directly or indirectly hold a majority of Entity E's voting shares. Moreover, even if Entity E is a VIE and Entity A is its primary beneficiary, Entity E is not considered to be under common control of Entity A for purposes of applying the guidance in paragraph [810-10-15-17AD(a)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17AD). Accordingly, Entity B (the reporting entity) is precluded from applying the accounting alternative to Entity E. ##### [810-10-55-205BA](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205BA) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:da7d86ecce62c33ce8c7c8a0b71454239c5d6a7df5897e33933a91924e68dd1a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Examples illustrate the application of the guidance in paragraph [810-10-15-17AD](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17AD) on determining whether a reporting entity that is a private company can elect the accounting alternative not to apply VIE guidance to a legal entity under common control: 1. a Common control leasing arrangement (Example 13) 2. b Car Company (reporting entity) under common control with Engine Company, Tire Company, and Purse Company (Example 14). ##### [810-10-55-205BB](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205BB) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:df1a83f4845d4942f74772fce7b68370d0660a647ed400c33178864b93a0f88c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume the following: 1. a The sole owner (not a public business entity) of Manufacturing Entity (a private company) also is the sole owner of Lessor Entity (a private company). 2. b The reporting entity is Manufacturing Entity. 3. c Manufacturing Entity leases its manufacturing facility from Lessor Entity. 4. d Lessor Entity owns no assets other than the manufacturing facility being leased to Manufacturing Entity. 5. e Manufacturing Entity pays property taxes on behalf of Lessor Entity and maintains the manufacturing facility. 6. f The sole owner of both entities has provided a guarantee of Lessor Entity's mortgage as required by the external lender. 7. g Manufacturing Entity has elected to apply the accounting alternative described in paragraph [810-10-15-17AD](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17AD). ##### [810-10-55-205BC](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205BC) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:21f82346005b3ae4142defaa1b66a57e16b3cbc87561cfad3971682ec8768d7d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Manufacturing Entity meets all the criteria in paragraph [810-10-15-17AD](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17AD), and, as a result of its elected accounting policy, Manufacturing Entity would apply the accounting alternative to Lessor Entity on the basis of the following: 1. a Manufacturing Entity (a private company) and Lessor Entity are under common control. 2. b Manufacturing Entity and Lessor Entity are under common control of an individual that is not a public business entity. 3. c Lessor Entity is not a public business entity. 4. d Manufacturing Entity does not directly or indirectly hold a controlling financial interest in Lessor Entity when considering only the General Subsections of this Topic. Manufacturing Entity should disclose the required information specified in paragraphs [810-10-50-2AG through 50-2AI](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-2AG) unless Lessor Entity is consolidated through accounting guidance other than VIE guidance. ##### [810-10-55-205BD](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205BD) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:dbc66f5c82da9f6d07ceac8c837e247d9523e13e5122277ffedf98fe09233769 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume the following: 1. a Reporting entity Car Company (Car Co.), a private company, produces vehicles for sale. 2. b Car Co. has elected to apply the accounting alternative described in paragraph [810-10-15-17AD](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17AD). 3. c The sole owner (not a public business entity) of Car Co. also is the sole owner of Engine Company (Engine Co.), Tire Company (Tire Co.), and Purse Company (Purse Co.). Therefore, Car Co., Engine Co., Tire Co., and Purse Co. are considered to be under common control. Only Purse Co. meets the definition of a public business entity. 4. d All companies under common control have third-party debt, and each respective company has pledged its assets as collateral for that debt. The third-party debt on each respective company is personally guaranteed by the owner. 5. e Engine Co. assumptions: 1. 1 Engine Co. was created by the owner to vertically integrate the supply chain for Car Co.'s production of vehicles. 2. 2 Engine Co. produces engines based on Car Co.'s design specifications. 3. 3 Engine Co. is the sole engine supplier for Car Co., and substantially all of Engine Co.'s production is sold to Car Co. 4. 4 No other engines on the market could replace the engines supplied by Engine Co. 5. 5 During 20XX, Car Co. charged Engine Co. $225,684 for management and other services rendered. 6. 6 During 20XX, Car Co. purchased $9,482,513 in engines from Engine Co. 7. 7 Engine Co. has an outstanding loan for $600,000 due to Car Co. that is unsecured and accrues interest at 6 percent. This loan is subordinated to all other debt, and there are no specific repayment terms. 8. 8 Historically, Car Co. has provided funding to Engine Co. at the request of the owner even though there is no existing contractual requirement to do so. 9. 9 Total book value of Engine Co.'s liabilities is $2,459,127 as of December 31, 20XX. 6. f Tire Co. assumptions: 1. 1 Tire Co. was created by the owner to vertically integrate the supply chain for the Car Co.'s production of vehicles. 2. 2 Tire Co. sells a majority of its tires to Car Co. 3. 3 Many substitutes on the market could replace the tires provided by Tire Co. 4. 4 During 20XX, Car Co. charged Tire Co. $74,568 for management and other services rendered. 5. 5 During 20XX, Car Co. purchased $3,792,929 of tires from Tire Co. 6. 6 Tire Co. has an outstanding loan for $200,000 due to Car Co. that is unsecured and accrues interest at 6 percent. This loan is subordinated to all other debt, and there are no specific repayment terms. 7. 7 Other than the $200,000 loan, Car Co. has never provided any other additional funding to Tire Co. and is not contractually obligated to do so. 8. 8 Total book value of Tire Co.'s liabilities is $1,250,000 as of December 31, 20XX. 7. g Purse Co. assumptions: 1. 1 Purse Co. sells high-end designer purses. 2. 2 No significant transactions or arrangements exist between Purse Co. and the other entities under common control. 3. 3 Car Co. did not provide any management services to Purse Co. 4. 4 Car Co. has never provided any additional funding to Purse Co. and is not contractually obligated to do so. 5. 5 Total book value of Purse Co.'s liabilities is $1,000,000 as of December 31, 20XX. ##### [810-10-55-205BE](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205BE) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:28ab44456dc39d8b6898da765ec55823dbf92905f0ff17ba70804fd7d2a1b23e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Car Co. meets all the criteria in paragraph [810-10-15-17AD](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17AD) for Engine Co. and Tire Co. and can elect the accounting alternative. As a result of its elected accounting policy, Car Co. would apply the accounting alternative to Engine Co. and Tire Co. on the basis of the following: 1. a Car Co. (a private company), Engine Co., and Tire Co. are under common control. 2. b Car Co., Engine Co., and Tire Co. are under common control of an individual that is not a public business entity. 3. c Neither Engine Co. nor Tire Co. is a public business entity. 4. d Car Co. does not directly or indirectly hold a controlling financial interest in Engine Co. or Tire Co. when considering only the General Subsections of this Topic. Although Purse Co. would not qualify for the accounting alternative because it is a public business entity, Car Co. does not consider Purse Co. to be a legal entity that needs to be assessed for consolidation because Car Co. has no variable interest in Purse Co. Therefore, Car Co. would not provide any disclosures related to Purse Co. under this accounting alternative. ##### [810-10-55-205BF](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205BF) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:0e235f1e1d85c4092c5fd201086e5180f15a3f257967366a5a3dac081fd92373 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Based on the fact pattern described in paragraphs [810-10-55-205BD through 55-205BE](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-205BD), the following disclosures may satisfy the provisions in paragraphs [810-10-50-2AG through 50-2AI](https://asc.understandingaccounting.org/asc/810/10/#810-10-50-2AG): 1. a Engine Company, Inc. (Engine Co.): Engine Co. and Car Company, Inc. (the Company) are under common control. Engine Co. was created by the owner to vertically integrate the supply chain for the Company's production of vehicles. The Company's ability to generate profits depends largely on Engine Co. Engine Co. produces engines for the Company's vehicles in accordance with the Company's design specifications for those engines. Substantially all of Engine Co.'s production is sold to the Company, and Engine Co. is the sole supplier of engines to the Company. No other engines on the market could replace the engines supplied by Engine Co. The Company provides Engine Co. with management and other services (including, but not limited to, accounting, billing, and administrative duties) for which it charged a management fee of $225,684 in 20XX. The Company purchased $9,482,513 of engines during 20XX from Engine Co. Engine Co. has an outstanding loan in the amount of $600,000 due to the Company that is unsecured and accrues interest at 6 percent. The loan is subordinated to all other debt, and no specific repayment terms exist. 2. b Tire Company, Inc. (Tire Co.): Tire Co. and the Company are under common control. Tire Co. was created by the owner to vertically integrate the supply chain for the Company's production of vehicles. Tire Co. produces tires for the Company's vehicles and sells a majority of those tires to the Company. The Company provides no design specifications for the tires, and many substitutes on the market could replace the tires that Tire Co. provides. The Company provides Tire Co. with management and other services (including, but not limited to, accounting, billing, and administrative duties) for which it charged a management fee of $74,568 in 20XX. Car Co. purchased $3,792,929 of tires during 20XX from Tire Co. Tire Co. has an outstanding loan in the amount of $200,000 due to the Company that is unsecured and accrues interest at 6 percent. The loan is subordinated to all other debt, and no specific repayment terms exist. 3. c Both Engine Co. and Tire Co. have third-party debt, and both companies have their assets pledged as collateral for that debt. The owner of the Company, Engine Co., and Tire Co. has personally guaranteed the third-party debt of the Company, Engine Co., and Tire Co. 4. d In addition to the $600,000 loan, the Company historically has been required to provide funds to Engine Co. at the request of the common owner. The Company believes that its maximum financial exposure to loss related to Engine Co. could equal all of Engine Co.'s liabilities. The book value of Engine Co.'s liabilities is $2,459,127 as of December 31, 20XX. 5. e Other than the $200,000 loan, the Company has never provided any other additional funding to Tire Co. and is not contractually obligated to do so. The Company believes that its maximum financial exposure related to Tire Co. is limited to the $200,000 loan outstanding and any accrued interest as of December 31, 20XX. ### Consolidation of Entities Controlled by Contract #### Implementation Guidance ##### [810-10-55-206](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-206) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:b7c8bfade3e8bdccba2b33861eaeff58c9edf6926f2a5bb336d7986c9af15ecd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The decision tree that follows illustrates the analysis to determine whether a physician practice management entity shall consolidate a physician practice. The decision tree contains the term, control, and financial interest requirements, as those requirements are affected by the interpretive guidance that is presumptive in nature. The other interpretive guidance shall also be considered when working through the decision tree. If the answer to any question in the decision tree is other than as shown by the arrows, then the physician practice management entity should not consolidate the physician practice. Use of the decision tree is not a substitute for application of the Consolidation of Entities Controlled by Contract Subsections, including all the interpretive guidance. The following is an illustration of the analysis to determine whether a physician practice management entity should consolidate a physician practice. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-F2A28022-240D-4356-B01F-8307730CD1E6-low.gif) #### Physician Practice Management Entity Shareholder Fact Patterns ##### [810-10-55-207](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-207) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:ecfe4d220ede61f42b0447ba891a432ac0c3bfb74f0af8608b3a8a6634e3e968 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Situations involving non-nominee and [nominee shareholder](https://asc.understandingaccounting.org/glossary/n/#nominee-shareholder "One or more shareholders whose relationship with the physician practice management entity (which can be either the physician practice management entity itself or its controlled subsidiaries) perpetually has all of the following characteristics: Time Frame: The physician practice management entity can at all times establish or effect a change in the nominee shareholder. The physician practice management entity can cause a change in the nominee shareholder an unlimited number of times, that is, changing the nominee shareholder one or more times does not affect the physician practice management entity's ability to change the nominee shareholder again and again. Discretion: The physician practice management entity has sole discretion without cause to establish or change the nominee shareholder. The physician practice management entity can name anyone as a new nominee shareholder (that is, the physician practice management entity's choice of an eligible nominee is not limited). Impact: The physician practice management entity and the nominally owned entity incur no more than a nominal cost to cause a change in the nominee shareholder. Neither the physician practice management entity nor the nominally owned entity is subject to any significant adverse impact upon a change in the nominee shareholder.") fact patterns are presented as additional information related to physician practice management entities. ##### [810-10-55-208](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-208) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:a20fdf6856ea57ab1a9dd98f2f70daf04a0f20cd5908be636e97f9042d4c1745 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following descriptions are included for background information purposes only. Not enough information is given in the examples to determine whether the physician practice management entity obtains an adequate controlling financial interest in the physician practice: 1. a A physician practice management entity (Entity A) acquires all the outstanding stock of a physician practice (Entity B) directly from Entity B shareholders by issuing shares of Entity A voting common stock. Concurrent with the acquisition, the physicians who are the former owners of Entity B form a new professional corporation (Entity C), which enters into a long-term management agreement with Entity B. The physicians formerly of Entity B, who are now owners and employees of Entity C, enter into employment agreements with Entity C. 2. b A physician practice management entity (Entity A) acquires all the outstanding stock of a physician practice (Entity B) directly from Entity B shareholders by issuing shares of Entity A voting common stock. Concurrent with the acquisition, the physicians and former owners of Entity B form a new professional corporation (Entity C) and enter into a long-term management agreement with Entity B. Although Entity A acquired the stock of Entity B, state law precludes contractual arrangements between physicians and hospitals and between physicians and health maintenance organizations from being held by a non-physician-owned practice (Entity B after the acquisition). Therefore, Entity B's patient contracts are transferred concurrent with the acquisition to Entity C. The physicians formerly of Entity B, who are now owners and employees of Entity C, enter into employment agreements with Entity C. 3. c A physician practice management entity creates a wholly owned subsidiary (Entity A), which acquires all the net assets of a physician practice (Entity B) through the physician practice management entity's issuing some of its shares of voting common stock to Entity B. Concurrent with the transaction, Entity B enters into a long-term management agreement with Entity A. The ownership of Entity B remains the same; however, the physicians (that is, the owners of Entity B) enter into new employment agreements with Entity B. ##### [810-10-55-209](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-209) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:12.238Z to 2026-09-10T01:29:12.238Z Record version: sha256:a7a44a972d3a690fecf9ad78192e8e3f0ad733e481115f8d9169e732d3569426 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following descriptions are included for background information purposes only. Not enough information is given in the examples to determine whether the physician practice management entity obtains an adequate controlling financial interest in the physician practice: 1. a At the direction of the physician practice management entity, a physician who will be the physician practice management entity's [nominee shareholder](https://asc.understandingaccounting.org/glossary/n/#nominee-shareholder "One or more shareholders whose relationship with the physician practice management entity (which can be either the physician practice management entity itself or its controlled subsidiaries) perpetually has all of the following characteristics: Time Frame: The physician practice management entity can at all times establish or effect a change in the nominee shareholder. The physician practice management entity can cause a change in the nominee shareholder an unlimited number of times, that is, changing the nominee shareholder one or more times does not affect the physician practice management entity's ability to change the nominee shareholder again and again. Discretion: The physician practice management entity has sole discretion without cause to establish or change the nominee shareholder. The physician practice management entity can name anyone as a new nominee shareholder (that is, the physician practice management entity's choice of an eligible nominee is not limited). Impact: The physician practice management entity and the nominally owned entity incur no more than a nominal cost to cause a change in the nominee shareholder. Neither the physician practice management entity nor the nominally owned entity is subject to any significant adverse impact upon a change in the nominee shareholder.") incorporates a nominally capitalized new physician practice. In a subsequent exchange of shares, the physician practice management entity becomes the outright owner of the shares of the existing physician practice. The physician or physicians who were the former owners of the existing physician practice simultaneously sever their employment relationship with the existing physician practice and establish an employment relationship with the new physician practice. According to the terms of another simultaneously executed agreement, the physician who established the new physician practice becomes the physician practice management entity's nominee shareholder of that practice. A management agreement between the physician practice management entity and the new physician practice is also simultaneously executed. 2. b The physician practice management entity issues its shares to the shareholders of the existing physician practice. Simultaneously, shares of the existing physician practice are delivered to a physician who is a nominee of the physician practice management entity, and a management agreement is executed between the physician practice management entity and the existing physician practice. By virtue of the terms of the management agreement that gives the rights to the residual equity of the existing physician practice to the physician practice management entity, the shares of the physician practice held by the nominee have only a nominal value. The physicians who previously owned the existing physician practice and who were employees of it execute new employment agreements with the now nominee-owned existing physician practice. Source downloaded (UTC): 2026-09-10T01:29:14.136Z to 2026-09-10T01:29:14.136Z Record version: sha256:4287c65ba0f0985790ee4f8b7fda1d55556d4ddb24dcf7a78cb47bd665c13c42 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-10-60: 60 Relationships [Read section](https://asc.understandingaccounting.org/asc/810/10/#60-relationships) SEC content: no #### Distinguishing Liabilities from Equity ##### [810-10-60-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-60-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:14.136Z to 2026-09-10T01:29:14.136Z Record version: sha256:a1662244cde83bc793040ee07f7389c56ef8ab5849613ed7c2f545c724b94a59 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For derivative transactions in [subsidiary](https://asc.understandingaccounting.org/glossary/s/#subsidiary "An entity, including an unincorporated entity such as a partnership or trust, in which another entity, known as its parent, holds a controlling financial interest. (Also, a variable interest entity that is consolidated by a primary beneficiary.)") stock with noncontrolling interest, see paragraphs [480-10-55-53 through 55-58](https://asc.understandingaccounting.org/asc/480/10/#480-10-55-53) . #### Income Taxes ##### [810-10-60-2](https://asc.understandingaccounting.org/asc/810/10/#810-10-60-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:14.136Z to 2026-09-10T01:29:14.136Z Record version: sha256:22b017a0202a49d81bf0e97392eba869f84b4fca1f150d2197912b03a92b6e6e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For deferred taxes on dividends of foreign operations, see paragraphs [740-10-25-39 through 25-41](https://asc.understandingaccounting.org/asc/740/10/#740-10-25-39) . #### Foreign Currency Matters ##### [810-10-60-3](https://asc.understandingaccounting.org/asc/810/10/#810-10-60-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:14.136Z to 2026-09-10T01:29:14.136Z Record version: sha256:650e2bba17fada036e9ecc055cd978602e1d393bce702d325cd794f9df27a194 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For the elimination of intra-entity profits with foreign entities, see paragraph [830-30-45-10](https://asc.understandingaccounting.org/asc/830/30/#830-30-45-10). #### Leases ##### [810-10-60-4](https://asc.understandingaccounting.org/asc/810/10/#810-10-60-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:14.136Z to 2026-09-10T01:29:14.136Z Record version: sha256:b3aa7269bd24d24c965c02db8782c37178f39ccbe56d2f14c6b2e7b35618ff67 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For [leases](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.") sold by a manufacturer to a leasing subsidiary, see paragraph [842-30-45-3](https://asc.understandingaccounting.org/asc/842/30/#842-30-45-3). #### Transfers and Servicing ##### [810-10-60-5](https://asc.understandingaccounting.org/asc/810/10/#810-10-60-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:14.136Z to 2026-09-10T01:29:14.136Z Record version: sha256:1dd42b2ecbc41dc98c9845ccd38a725cc9a068942bfce8cffb67f618f341534b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For transfers of ownership interest in a subsidiary with financial assets, see paragraph [860-10-55-13](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-13). ### Variable Interest Entities ##### [810-10-60-6](https://asc.understandingaccounting.org/asc/810/10/#810-10-60-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:14.136Z to 2026-09-10T01:29:14.136Z Record version: sha256:36cd6d06d32c7b08492422b81e7e914e22bffffe206cd64f7963dd0826569458 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-16](https://asc.understandingaccounting.org/updates/asu-2009-16/). ##### [810-10-60-7](https://asc.understandingaccounting.org/asc/810/10/#810-10-60-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:14.136Z to 2026-09-10T01:29:14.136Z Record version: sha256:9a58ba14b639212e84931ed88528a6bdb40c6df622b0274b2d5247b69b82da27 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-16](https://asc.understandingaccounting.org/updates/asu-2009-16/). Source downloaded (UTC): 2026-09-10T01:29:16.387Z to 2026-09-10T01:29:16.387Z Record version: sha256:584bdb333a462155383cbb0dff491b9431244c9acab9c0c23037545bf4a5d687 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-10-65: 65 Transition and Open Effective Date Information [Read section](https://asc.understandingaccounting.org/asc/810/10/#65-transition-and-open-effective-date-information) SEC content: no ##### [810-10-65-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-65-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:16.387Z to 2026-09-10T01:29:16.387Z Record version: sha256:1bf537f4b4c6e0f6f82d0946ee6248d80aa67218cc5b7ac145045eac8e0bde97 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 06/20/2011 after the end of the transition period stated in FASB Statements No. 160, _Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51, and No. 164, Not-for-Profit Entities: Mergers and Acquisitions_. ##### [810-10-65-2](https://asc.understandingaccounting.org/asc/810/10/#810-10-65-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:16.387Z to 2026-09-10T01:29:16.387Z Record version: sha256:967310335292b4de83f48306972e3aa987f47d1c8fd77edf9953b526d39ed2a8 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 FASB Statement No. 167, _Amendments to FASB Interpretation No. 46(R)_. ##### [810-10-65-3](https://asc.understandingaccounting.org/asc/810/10/#810-10-65-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:16.387Z to 2026-09-10T01:29:16.387Z Record version: sha256:221ade6cfcb43a1d027c368ccfaddcd7b3d73e05b3f3cfbf77ac705aec597d63 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 06/20/2011 after the end of the transition period stated in Accounting Standards Update No. 2010-02, _Consolidation (Topic 810): Accounting and Reporting for Decreases in Ownership of a Subsidiary—a Scope Clarification_. #### Transition Related to Accounting Standards Update No. 2014-07, Consolidation (Topic 810): Applying Variable Interest Entities Guidance to Common Control Leasing Arrangements ##### [810-10-65-4](https://asc.understandingaccounting.org/asc/810/10/#810-10-65-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:16.387Z to 2026-09-10T01:29:16.387Z Record version: sha256:9782411ce005993940af517c24e3dc19d85c21aa78a519fc3d03532c39f03352 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following represents the transition information related to Accounting Standards Update No. 2014-07, _Consolidation (Topic 810): Applying Variable Interest Entities Guidance to Common Control Leasing Arrangements,_ referenced in paragraph [810-10-15-17AA](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17AA): 1. a Upon adoption of the accounting alternative, the guidance in the Variable Interest Entities Subsections of this Subtopic shall be applied retrospectively as of the beginning of the first fiscal year in which the accounting alternative is elected and to all periods presented. 2. b [Subparagraph superseded by Accounting Standards Update No. 2016-03](https://asc.understandingaccounting.org/updates/asu-2016-03/). 3. c [Subparagraph superseded by Accounting Standards Update No. 2016-03](https://asc.understandingaccounting.org/updates/asu-2016-03/). 4. d If a reporting entity deconsolidates a variable interest entity (VIE) as a result of the application of the accounting alternative guidance in the Variable Interest Entities Subsections of this Subtopic, the reporting entity shall initially measure any retained interest in the deconsolidated VIE at its carrying amount at the date the accounting alternative guidance first applies. In this context, _carrying amount_ refers to the amount at which any retained interest would have been carried in the reporting entity's financial statements if the accounting alternative guidance had been effective when the reporting entity became involved with the VIE. Any difference between the net amount removed from the statement of financial position of the reporting entity and the amount of any retained interest in the deconsolidated VIE shall be recognized as a cumulative-effect adjustment to retained earnings. The amount of any cumulative-effect adjustment related to deconsolidation shall be disclosed separately. 5. e An entity shall provide the disclosures in paragraphs [250-10-50-1 through 50-3](https://asc.understandingaccounting.org/asc/250/10/#250-10-50-1) except for the disclosure in paragraph [250-10-50-1(b)(2)](https://asc.understandingaccounting.org/asc/250/10/#250-10-50-1) in the period the entity adopts the accounting alternative guidance in the Variable Interest Entities Subsections of this Subtopic. 6. f A private company that makes an accounting policy election to apply the accounting alternative guidance in the Variable Interest Entities Subsections of this Subtopic for the first time need not justify that the use of the accounting alternative is preferable as described in paragraph [250-10-45-2](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-2). ##### [810-10-65-5](https://asc.understandingaccounting.org/asc/810/10/#810-10-65-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:16.387Z to 2026-09-10T01:29:16.387Z Record version: sha256:91d33385f3f8fb8f808b553bf8990524ba1453c307175f7f639eb1d86f86e2d5 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. 2014-10, _Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation_. ##### [810-10-65-6](https://asc.understandingaccounting.org/asc/810/10/#810-10-65-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:16.387Z to 2026-09-10T01:29:16.387Z Record version: sha256:fb4a3c1af1148404f7a16977317e6e8b743b64440c001f6e9a7084476890e2a2 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. 2014-13, _Consolidation (Topic 810): Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity_. ##### [810-10-65-7](https://asc.understandingaccounting.org/asc/810/10/#810-10-65-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:16.387Z to 2026-09-10T01:29:16.387Z Record version: sha256:ea295811c289bf86951895b685775dea0b7ab6b20ede3cbb1792bab12c07b11c 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. 2015-02, _Consolidation (Topic 810): Amendments to the Consolidation Analysis_. ##### [810-10-65-8](https://asc.understandingaccounting.org/asc/810/10/#810-10-65-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:16.387Z to 2026-09-10T01:29:16.387Z Record version: sha256:e25bd17e9f113f09a00fa64bad887ba5098c1cc0e5fe221ccc29c68f8bce594d 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. 2016-17, _Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control_. ##### [810-10-65-9](https://asc.understandingaccounting.org/asc/810/10/#810-10-65-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:16.387Z to 2026-09-10T01:29:16.387Z Record version: sha256:5f77fb8da0b30bf75eff544363652defbb7cf3f17a2cb1e4cb0aca7d9009ea6c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 07/10/2023 after the end of the transition period stated in Accounting Standards Update No. 2018-17, _Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities_. Source downloaded (UTC): 2026-09-10T01:29:22.284Z to 2026-09-10T01:29:22.284Z Record version: sha256:5e6f2a7db41672cd216ff769a37c4c516928aa802e04f42e5d7cd9e9a67c8946 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-10-S00: SEC 00 Status [Read section](https://asc.understandingaccounting.org/asc/810/10/#sec-00-status) SEC content: yes ##### [810-10-S00-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-S00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:22.284Z to 2026-09-10T01:29:22.284Z Record version: sha256:34d60e831b726fe58f8e66303dc365b17133693766c8d6b05b91f43a5d8619d6 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
810-10-S99-1 through S99-4
AmendedAccounting Standards Update No. 2019-0707/26/2019
810-10-S99-2AmendedAccounting Standards Update No. 2010-2108/02/2010
810-10-S99-4AmendedAccounting Standards Update No. 2018-0403/09/2018
810-10-S99-4AmendedAccounting Standards Update No. 2009-0709/15/2009
810-10-S99-5AmendedAccounting Standards Update No. 2012-0308/27/2012
810-10-S99-5AmendedAccounting Standards Update No. 2010-2208/19/2010
Source downloaded (UTC): 2026-09-10T01:29:27.795Z to 2026-09-10T01:29:27.795Z Record version: sha256:7ccb65e6d2a001b46c0489ad5133dd8b3cdafee49f26557cb9a48e53f4f135b4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-10-S25: SEC 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/810/10/#sec-25-recognition) SEC content: yes #### Consolidated Financial Statements of the Registrant and its Subsidiaries ##### [810-10-S25-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-S25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:27.795Z to 2026-09-10T01:29:27.795Z Record version: sha256:b22113ce5eee20a84b3d01ae4b3c4c2dbc982e3cad8b8ecdcf29bf3ca58115f1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [810-10-S99-2](https://asc.understandingaccounting.org/asc/810/10/#810-10-S99-2), Regulation S-X Rule 3A-02, for requirements for a registrant in deciding on a consolidation policy. #### Intercompany (Intra-entity) Items and Transactions ##### [810-10-S25-2](https://asc.understandingaccounting.org/asc/810/10/#810-10-S25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:27.795Z to 2026-09-10T01:29:27.795Z Record version: sha256:a7f5f4b29f002b2a2d2d0977493c7837195a72fdc0df3f940f5eb5c1c45cd843 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [810-10-S99-4](https://asc.understandingaccounting.org/asc/810/10/#810-10-S99-4), Regulation S-X Rule 3A-04, for requirements for the elimination of intercompany (intra-entity) items and transactions. #### Accounting for Divestiture of a Subsidiary or Other Business Operations ##### [810-10-S25-3](https://asc.understandingaccounting.org/asc/810/10/#810-10-S25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:27.795Z to 2026-09-10T01:29:27.795Z Record version: sha256:664475e4fdb0a0ace35a3c50c8254bc3827d6bc4e8a1726a53ca5913733677a3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [810-10-S99-5](https://asc.understandingaccounting.org/asc/810/10/#810-10-S99-5), SAB Topic 5.E, for SEC Staff views on when an accounting divestiture has not occurred. Source downloaded (UTC): 2026-09-10T01:29:30.170Z to 2026-09-10T01:29:30.170Z Record version: sha256:8d0d2f0598ef8d3dca23a8675921484d82976e49c58eb3fd2520c3c671bbfb2a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-10-S35: SEC 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/810/10/#sec-35-subsequent-measurement) SEC content: yes #### Accounting for Divestiture of a Subsidiary or Other Business Operations ##### [810-10-S35-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-S35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:30.170Z to 2026-09-10T01:29:30.170Z Record version: sha256:c7eef6b12e5d9af3387f0d8fc567481fce1a814df638b8e1010bef95632419a6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [810-10-S99-5](https://asc.understandingaccounting.org/asc/810/10/#810-10-S99-5), SAB Topic 5.E, for SEC Staff views on when an accounting divestiture has not occurred. Source downloaded (UTC): 2026-09-10T01:29:32.475Z to 2026-09-10T01:29:32.475Z Record version: sha256:8bf54c8a5c8a4cf45fbf8a757f21867c9ced7f0d460a1cdc01a29d396e82559a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-10-S40: SEC 40 Derecognition [Read section](https://asc.understandingaccounting.org/asc/810/10/#sec-40-derecognition) SEC content: yes #### Accounting for Divestiture of a Subsidiary or Other Business Operation ##### [810-10-S40-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-S40-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:32.475Z to 2026-09-10T01:29:32.475Z Record version: sha256:e45fb87ebac1d8ad80ba40e658372b8cdd642d267b6590a42eda8adaebafcbfa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [810-10-S99-5](https://asc.understandingaccounting.org/asc/810/10/#810-10-S99-5), SAB Topic 5.E, for SEC Staff views on when an accounting divestiture has not occurred. #### Accounting for Gain Recognition in Certain Transactions Involving the General Partner in a Master Limited Partnership ##### [810-10-S40-2](https://asc.understandingaccounting.org/asc/810/10/#810-10-S40-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:32.475Z to 2026-09-10T01:29:32.475Z Record version: sha256:1be9b756c42df52f994f79066b001403b8a0c72116da634a6b22c3db96b6e39a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [810-10-S99-6](https://asc.understandingaccounting.org/asc/810/10/#810-10-S99-6), SEC Observer Comment: Accounting for Gain Recognition in Certain Transactions Involving the General Partner in a Master Limited Partnership Source downloaded (UTC): 2026-09-10T01:29:35.137Z to 2026-09-10T01:29:35.137Z Record version: sha256:861155373f08a074aabff82afe8de68ccbc9d3fc6e6073be00fc018b3160d11b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-10-S45: SEC 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/810/10/#sec-45-other-presentation-matters) SEC content: yes #### Classification of Subsidiary's Loan Payable in Consolidated Balance Sheet when Subsidiary's and Parent's Fiscal Years Differ ##### [810-10-S45-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-S45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:35.137Z to 2026-09-10T01:29:35.137Z Record version: sha256:e07376cbde87f4ba2977ecf2ff4220f1d75bf1f8f4bc89d08fb139497d25595a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [470-10-S99-4](https://asc.understandingaccounting.org/asc/470/10/#470-10-S99-4), SEC Observer Comment: Classification of Subsidiary's Loan Payable in Consolidated Balance Sheet when Subsidiary's and Parent's Fiscal Years Differ, for SEC Staff views on classification of debt when a subsidiary's and parent's fiscal year differ. #### Accounting for Divestiture of a Subsidiary or Other Business Operation ##### [810-10-S45-2](https://asc.understandingaccounting.org/asc/810/10/#810-10-S45-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:35.137Z to 2026-09-10T01:29:35.137Z Record version: sha256:eee0800bd6427c46604a5fd07bdf8a7679ebdc9dce20fc10c902853353ca33ea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [810-10-S99-5](https://asc.understandingaccounting.org/asc/810/10/#810-10-S99-5), SAB Topic 5.E, for SEC Staff views on when an accounting divestiture has not occurred. Source downloaded (UTC): 2026-09-10T01:29:38.651Z to 2026-09-10T01:29:38.651Z Record version: sha256:658c7e495532fee30bd4f0c50784bd3eb29a24fefeed43bc3be9ef4dd48ccbfb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-10-S50: SEC 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/810/10/#sec-50-disclosure) SEC content: yes #### Disclosure of Accounting Policies ##### [810-10-S50-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-S50-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:38.651Z to 2026-09-10T01:29:38.651Z Record version: sha256:9aa5c8dca4cc2e6ae96680e5b9357c6f878c2b87202cf2fc615a1f91e0445d39 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [810-10-S99-2](https://asc.understandingaccounting.org/asc/810/10/#810-10-S99-2), Regulation S-X Rule 3A-02, for requirements for disclosure of consolidation policy. #### Statements as to Principles of Consolidation or Combination Followed ##### [810-10-S50-2](https://asc.understandingaccounting.org/asc/810/10/#810-10-S50-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:38.651Z to 2026-09-10T01:29:38.651Z Record version: sha256:dfd203532a80bf76965e8e1323443a164f23d54821b9a7c3dd2a4a24091e058b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [810-10-S99-3](https://asc.understandingaccounting.org/asc/810/10/#810-10-S99-3), Regulation S-X Rule 3A-03, for requirements for disclosure of principles followed in consolidating or combining separate financial statements. #### Intercompany (Intra-entity) Items and Transactions ##### [810-10-S50-3](https://asc.understandingaccounting.org/asc/810/10/#810-10-S50-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:38.651Z to 2026-09-10T01:29:38.651Z Record version: sha256:98c639085e5c41e158e4d8ac59bc24d25e39a657c50ce69b8181f7f0877347d6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [810-10-S99-4](https://asc.understandingaccounting.org/asc/810/10/#810-10-S99-4), Regulation S-X Rule 3A-04, for requirements for disclosure of intercompany (intra-entity) items and transactions. Source downloaded (UTC): 2026-09-10T01:29:44.246Z to 2026-09-10T01:29:44.246Z Record version: sha256:0244c7a00e30d334dd5ac4391288a3182fe9dcbe6d57bf4cf57502ef1280609d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-10-S99: SEC 99 SEC Materials [Read section](https://asc.understandingaccounting.org/asc/810/10/#sec-99-sec-materials) SEC content: yes #### SEC Rules, Regulations, and Interpretations ##### [810-10-S99-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-S99-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:44.246Z to 2026-09-10T01:29:44.246Z Record version: sha256:03218f1d2653806b01b0b87d89da9a5e2030cb68980864ee7dc3926142173c36 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of Regulation S-X Rule 3A-01, (17 CFR 210.3A-01). - \[Reserved\] ##### [810-10-S99-2](https://asc.understandingaccounting.org/asc/810/10/#810-10-S99-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:44.246Z to 2026-09-10T01:29:44.246Z Record version: sha256:0d0febbda7b1a1c6b4ef6be948b91e8ab9ca8b9e65920d4caa74c638ef3b58d6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of Regulation S-X Rule 3A-02, Consolidated Financial Statements of the Registrant and its Subsidiaries (17 CFR 210.3A-02). - In deciding upon consolidation policy, the registrant must consider what financial presentation is most meaningful in the circumstances and should follow in the consolidated financial statements principles of inclusion or exclusion which will clearly exhibit the financial position and results of operations of the registrant. There is a presumption that consolidated financial statements are more meaningful than separate financial statements and that they are usually necessary for a fair presentation when one entity directly or indirectly has a controlling financial interest in another entity. Other particular facts and circumstances may require combined financial statements, an equity method of accounting, or valuation allowances in order to achieve a fair presentation. - (a) Majority ownership: Among the factors that the registrant should consider in determining the most meaningful presentation is majority ownership. Generally, registrants shall consolidate entities that are majority owned and shall not consolidate entities that are not majority owned. The determination of _majority ownership_ requires a careful analysis of the facts and circumstances of a particular relationship among entities. In rare situations, consolidation of a majority owned subsidiary may not result in a fair presentation, because the registrant, in substance, does not have a controlling financial interest (for example, when the subsidiary is in legal reorganization or in bankruptcy). In other situations, consolidation of an entity, notwithstanding the lack of technical majority ownership, is necessary to present fairly the financial position and results of operations of the registrant, because of the existence of a parent-subsidiary relationship by means other than record ownership of voting stock. - (b) \[Reserved\] - \[83 FR 50200, Oct. 4, 2018\] ##### [810-10-S99-3](https://asc.understandingaccounting.org/asc/810/10/#810-10-S99-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:44.246Z to 2026-09-10T01:29:44.246Z Record version: sha256:77a771fb2cc608250fc80c92b14fdaed12af8ea1cc7f9dba23305f9bb4b7c78c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of Regulation S-X Rule 3A-03, Statement as to Principles of Consolidation or Combination Followed (17 CFR 210.3A-03). - (a) \[Reserved\] - (b) As to each consolidated financial statement and as to each combined financial statement, if there has been a change in the persons included or excluded in the corresponding statement for the preceding fiscal period filed with the Commission that has a material effect on the financial statements, the persons included and the persons excluded shall be disclosed. - \[37 FR 14597, July 21, 1972. Redesignated at 45 FR 63687, Sept. 25, 1980, and 46 FR 56179, Nov. 16, 1981; 83 FR 50200, Oct. 4, 2018\] ##### [810-10-S99-4](https://asc.understandingaccounting.org/asc/810/10/#810-10-S99-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:44.246Z to 2026-09-10T01:29:44.246Z Record version: sha256:21eb33bf597dbf6c5014cd59ce7b46ed0051e96c303f36bcd25686c3bd7b31b2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of Regulation S-X Rule 3A-04 (17 CFR 210.3A-04). - \[Reserved\] #### SEC Staff Guidance ##### [810-10-S99-5](https://asc.understandingaccounting.org/asc/810/10/#810-10-S99-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:44.246Z to 2026-09-10T01:29:44.246Z Record version: sha256:a5e7424f4480806b7106d62ac413b857045a597982d4ac11f38a79b4823f8ce7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of SAB Topic 5.E, Accounting for Divestiture of a Subsidiary or Other Business Operations. - Facts: Company X transferred certain operations (including several subsidiaries) to a group of former employees who had been responsible for managing those operations. Assets and liabilities with a net book value of approximately $8 million were transferred to a newly formed entity-Company Y-wholly owned by the former employees. The consideration received consisted of $1,000 in cash and interest bearing promissory notes for $10 million, payable in equal annual installments of $1 million each, plus interest, beginning two years from the date of the transaction. The former employees possessed insufficient assets to pay the notes and Company X expected the funds for payments to come exclusively from future operations of the transferred business. - Company X remained contingently liable for performance on existing contracts transferred and agreed to guarantee, at its discretion, performance on future contracts entered into by the newly formed entity. Company X also acted as guarantor under a line of credit established by Company Y. - The nature of Company Y's business was such that Company X's guarantees were considered a necessary predicate to obtaining future contracts until such time as Company Y achieved profitable operations and substantial financial independence from Company X. - Question: If deconsolidation of the subsidiaries and business operations is appropriate, can Company X recognize a gain? - Interpretive Response: Before recognizing any gain, Company X should identify all of the elements of the divesture arrangement and allocate the consideration exchanged to each of those elements. In this regard, we believe that Company X would recognize the guarantees at fair value in accordance with FASB ASC Topic 460, Guarantees; the contingent liability for performance on existing contracts in accordance with FASB ASC Topic 450, Contingencies; and the promissory notes in accordance with FASB ASC Topic 310, Receivables, and FASB ASC Topic 835, Interest. ##### [810-10-S99-6](https://asc.understandingaccounting.org/asc/810/10/#810-10-S99-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:44.246Z to 2026-09-10T01:29:44.246Z Record version: sha256:f25eaca1ce50243d01cd17ede98a7379d673336836b2f41586abf33e69bf663f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of the SEC Observer Comment: Accounting for Gain Recognition in Certain Transactions Involving the General Partner in a Master Limited Partnership. - The SEC staff has objected to immediate gain recognition when the general partner in a Master Limited Partnership has continuing exposure in forms such as debt guarantees, financing commitments, or restrictions on the sale of MLP units. The SEC staff also will not accept immediate gain recognition in transactions when the general partner (who will continue to act in that capacity and exercise significant influence but not control over the MLP) sponsors the [rollup](https://asc.understandingaccounting.org/glossary/r/#rollup "A way to create a master limited partnership in which two or more legally separate limited partnerships are combined into one master limited partnership.") of several limited partnerships into a MLP and receives tradable limited partnership units in exchange for relinquishing the rights to certain future fees from the limited partnerships. Source downloaded (UTC): 2026-09-10T01:29:46.054Z to 2026-09-10T01:30:03.342Z Record version: sha256:4521c219673e3e9a37b03f85ec5079de34a13a6976eb0ecdc3968b2595d32992 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-20: Consolidation — Control of Partnerships and Similar Entities ### Machine-generated study aids ```json { "summary": "ASC 810-20 formerly provided the consolidation model for limited partnerships and similar entities, addressing when a general partner controls a limited partnership (the \"kick-out rights\"/substantive participating rights analysis) and must consolidate it. Every paragraph in the subtopic — Sections 05, 15, 25, 45, and 55 — was superseded by ASU 2015-02 (Amendments to the Consolidation Analysis). Limited partnerships and similar entities are now evaluated under the general variable interest entity and voting interest models in Subtopic 810-10 and, for equity method purposes, 323-30.", "key_points": [ "Every paragraph of ASC 810-20 (05-1 through 05-2, 15-1 through 15-3, 25-1 through 25-21, 45-1, and 55-1 through 55-16) is marked 'Paragraph superseded by Accounting Standards Update No. 2015-02.'", "Because no substantive guidance remains, ASC 810-20 imposes no current recognition, presentation, or disclosure requirements and cannot be cited as authoritative support.", "ASU 2015-02 eliminated the separate general-partner consolidation model and folded limited partnerships and similar entities into the single consolidation analysis in Subtopic 810-10.", "Under current guidance, a reporting entity first applies the variable interest entity model in 810-10 (including the power and economics primary-beneficiary tests) and, only if the entity is not a VIE, the voting interest model.", "The concepts formerly housed here — kick-out rights and substantive participating rights held by limited partners — survive as defined terms used within the 810-10 analysis.", "Historical financial statements for periods before adoption of ASU 2015-02 may still reflect conclusions reached under the superseded 810-20 guidance." ], "categories": [ "Consolidation", "Transition and effective dates", "Presentation" ], "audience_level": "intermediate", "student_note": "This subtopic is an empty shell: knowing it was wholly superseded by ASU 2015-02 is the point. The common mistake is citing the old rule that a general partner is presumed to control a limited partnership; today the partnership must first be run through the VIE analysis in 810-10.", "related_topics": [ "810-10", "323-30", "810-30", "970-810", "958-810" ], "key_concepts": [ "limited partnership consolidation", "general partner control", "kick-out rights", "substantive participating rights", "variable interest entity", "voting interest model", "superseded guidance" ] } ``` Source downloaded (UTC): 2026-09-10T01:29:46.054Z to 2026-09-10T01:29:46.054Z Record version: sha256:6cb192180e23143348ed7e941d8aa948a2708331cd0667f052da8670ae0922b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-20-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/810/20/#00-status) SEC content: no ##### [810-20-00-1](https://asc.understandingaccounting.org/asc/810/20/#810-20-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:46.054Z to 2026-09-10T01:29:46.054Z Record version: sha256:b6ac7c71e60debe9c53840f5f4d0bdbf639cee3f054568793b46916f35b17bb1 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
Kick-Out Rights (1st def.)SupersededAccounting Standards Update No. 2015-0202/18/2015
Kick-Out Rights (2nd def.)SupersededAccounting Standards Update No. 2015-0202/18/2015
Ordinary Course of BusinessSupersededAccounting Standards Update No. 2015-0202/18/2015
Participating Rights (2nd def.)SupersededAccounting Standards Update No. 2015-0202/18/2015
Protective Rights (2nd def.)SupersededAccounting Standards Update No. 2015-0202/18/2015
With CauseSupersededAccounting Standards Update No. 2015-0202/18/2015
Without CauseSupersededAccounting Standards Update No. 2015-0202/18/2015
810-20-05-1SupersededAccounting Standards Update No. 2015-0202/18/2015
810-20-05-2SupersededAccounting Standards Update No. 2015-0202/18/2015
810-20-05-2AmendedAccounting Standards Update No. 2009-1712/23/2009
810-20-15-1 through 15-3
SupersededAccounting Standards Update No. 2015-0202/18/2015
810-20-25-1 through 25-21
SupersededAccounting Standards Update No. 2015-0202/18/2015
810-20-45-1SupersededAccounting Standards Update No. 2015-0202/18/2015
810-20-55-1 through 55-16
SupersededAccounting Standards Update No. 2015-0202/18/2015
Source downloaded (UTC): 2026-09-10T01:29:49.579Z to 2026-09-10T01:29:49.579Z Record version: sha256:c53880f4ae4f65213403ad8d3de3b6441594856d7e1619430aca301752110a1e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-20-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/810/20/#05-overview-and-background) SEC content: no ##### [810-20-05-1](https://asc.understandingaccounting.org/asc/810/20/#810-20-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:49.579Z to 2026-09-10T01:29:49.579Z Record version: sha256:ae8ef9fd694dbdecf93912f8dc366800b0a12cf8e08c5ee76e4638e8e755d490 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-05-2](https://asc.understandingaccounting.org/asc/810/20/#810-20-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:49.579Z to 2026-09-10T01:29:49.579Z Record version: sha256:5f79d45291a806a6bf073603dc6506291b274971200fd2b969eef66431387659 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). Source downloaded (UTC): 2026-09-10T01:29:51.594Z to 2026-09-10T01:29:51.594Z Record version: sha256:22dba4567dd9a29481670ed4262821bab5f632738573134f987634685cf7548b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-20-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/810/20/#15-scope-and-scope-exceptions) SEC content: no ##### [810-20-15-1](https://asc.understandingaccounting.org/asc/810/20/#810-20-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:51.594Z to 2026-09-10T01:29:51.594Z Record version: sha256:9fa7d99857c47677e34b748ad0cb072707704c9ce4bae2a62dd3ee2c634cb56c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-15-2](https://asc.understandingaccounting.org/asc/810/20/#810-20-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:51.594Z to 2026-09-10T01:29:51.594Z Record version: sha256:5a84c626af8f9997ebb68b5f9de78fb93c4a376defce1d6486f016f88ea74258 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-15-3](https://asc.understandingaccounting.org/asc/810/20/#810-20-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:51.594Z to 2026-09-10T01:29:51.594Z Record version: sha256:84e4b8d042f0d7ca70d2ae3e7feb7011ccc2aa8cbd2c0b8a9dad4b14213a00b0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). Source downloaded (UTC): 2026-09-10T01:29:57.392Z to 2026-09-10T01:29:57.392Z Record version: sha256:9a770090747248bc0fb953dd7808ba762bbcbc24f26ab7bf0b8d5a38c08d98c4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-20-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/810/20/#25-recognition) SEC content: no ##### [810-20-25-1](https://asc.understandingaccounting.org/asc/810/20/#810-20-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:57.392Z to 2026-09-10T01:29:57.392Z Record version: sha256:60ef013ee2f1d28a9a7f8a01009e7224db2dbcdae37c784dbddd85aa2aa3f5db Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-25-2](https://asc.understandingaccounting.org/asc/810/20/#810-20-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:57.392Z to 2026-09-10T01:29:57.392Z Record version: sha256:0adca8e455cd92bb9788ce2d1b4a44772bf9ca649c0053f29c87dd292ebe181a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-25-3](https://asc.understandingaccounting.org/asc/810/20/#810-20-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:57.392Z to 2026-09-10T01:29:57.392Z Record version: sha256:63bf6e019ae72a502cc01644ac8d4ba4d705a89233c9175ef16cd9a07a3b14d4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-25-4](https://asc.understandingaccounting.org/asc/810/20/#810-20-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:57.392Z to 2026-09-10T01:29:57.392Z Record version: sha256:b3a876c8e2139159b232e090b5b018820fba88baafc0e4d357095b0c0262c5ae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-25-5](https://asc.understandingaccounting.org/asc/810/20/#810-20-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:57.392Z to 2026-09-10T01:29:57.392Z Record version: sha256:08906246ad87f6da7bcf8eb6e677e71d3a25d72e5e36daed29b69895809ebbfc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-25-6](https://asc.understandingaccounting.org/asc/810/20/#810-20-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:57.392Z to 2026-09-10T01:29:57.392Z Record version: sha256:afcca011800c90a0c3f11c6b98678d6beab3f05371f75d492760618328a15243 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-25-7](https://asc.understandingaccounting.org/asc/810/20/#810-20-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:57.392Z to 2026-09-10T01:29:57.392Z Record version: sha256:2fd65179e2abb8002eaf18b10a9d4d4bc81401a04d865f8b3739e9edfd4c73a2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-25-8](https://asc.understandingaccounting.org/asc/810/20/#810-20-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:57.392Z to 2026-09-10T01:29:57.392Z Record version: sha256:1a3e41c04690fd7fb8f1d502c6ab485c286a61ae62f0c5b818ed59e43b1e7f2e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-25-9](https://asc.understandingaccounting.org/asc/810/20/#810-20-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:57.392Z to 2026-09-10T01:29:57.392Z Record version: sha256:e564af5de4b9a62865dbda7cf4d3353dd5905faa3e541999a134390312196a0f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-25-10](https://asc.understandingaccounting.org/asc/810/20/#810-20-25-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:57.392Z to 2026-09-10T01:29:57.392Z Record version: sha256:cae56c37810c939a79c0007075e6f2587a3a494a5bb35ff23bd16d28577bb662 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-25-11](https://asc.understandingaccounting.org/asc/810/20/#810-20-25-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:57.392Z to 2026-09-10T01:29:57.392Z Record version: sha256:cf4ada015b84e9f6e44c78fe15215252c383bc6e75d20da3a6dafce815a42320 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-25-12](https://asc.understandingaccounting.org/asc/810/20/#810-20-25-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:57.392Z to 2026-09-10T01:29:57.392Z Record version: sha256:bdeff96d8c31195de53f79778ff538496d7bb16ba8a85d961e6a6f09cf2c9abf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-25-13](https://asc.understandingaccounting.org/asc/810/20/#810-20-25-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:57.392Z to 2026-09-10T01:29:57.392Z Record version: sha256:0f1a0bbbaae1629ab00d0c1e9bc0d68804b34ed13eb3e667a23f920f2d1b5540 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-25-14](https://asc.understandingaccounting.org/asc/810/20/#810-20-25-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:57.392Z to 2026-09-10T01:29:57.392Z Record version: sha256:0941cbadaa07e4992dd3eb2b1bd4c2971d1ed933aeb69602f3007006c3b1850e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-25-15](https://asc.understandingaccounting.org/asc/810/20/#810-20-25-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:57.392Z to 2026-09-10T01:29:57.392Z Record version: sha256:7fb9d4b971f58224f620545745b0aa7111507d07d32777ece472c2c9f1c8b1fd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-25-16](https://asc.understandingaccounting.org/asc/810/20/#810-20-25-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:57.392Z to 2026-09-10T01:29:57.392Z Record version: sha256:9543f41b8e711c49355c9dfc46de995364c3f257a851ac04d300050cb3579ade Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-25-17](https://asc.understandingaccounting.org/asc/810/20/#810-20-25-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:57.392Z to 2026-09-10T01:29:57.392Z Record version: sha256:0ce7c4a55b569a80a8de7371cc4796d8e46ef48136b4850412a8dbcf3ba3e941 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-25-18](https://asc.understandingaccounting.org/asc/810/20/#810-20-25-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:57.392Z to 2026-09-10T01:29:57.392Z Record version: sha256:d095b72ac1834f9638637e59f3f771037f6aeca32a5a6518ca7d89cb0ca8f9a7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-25-19](https://asc.understandingaccounting.org/asc/810/20/#810-20-25-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:57.392Z to 2026-09-10T01:29:57.392Z Record version: sha256:7caa65c238464a1523e6c74092d797e8c3c238b8550773bc19c141ec712ceb1f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-25-20](https://asc.understandingaccounting.org/asc/810/20/#810-20-25-20) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:57.392Z to 2026-09-10T01:29:57.392Z Record version: sha256:08acb3f1245d8158231c61828e63bb3968a9e16d59b5940ce382f177538c354a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-25-21](https://asc.understandingaccounting.org/asc/810/20/#810-20-25-21) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:57.392Z to 2026-09-10T01:29:57.392Z Record version: sha256:d45584f0458d9d04fe8afa757402116c2218aaf14d52c144579d91e7f92ec2ae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). Source downloaded (UTC): 2026-09-10T01:30:00.597Z to 2026-09-10T01:30:00.597Z Record version: sha256:aca66437dc2aa6d2e4924f90aaf9c8917c82a9c68d3eb70478e5bf96d6ce4de5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-20-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/810/20/#45-other-presentation-matters) SEC content: no ##### [810-20-45-1](https://asc.understandingaccounting.org/asc/810/20/#810-20-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:00.597Z to 2026-09-10T01:30:00.597Z Record version: sha256:111dac7700d1736ff617c10e07fe140ee5dd6bec85bdf0f3aa334600bdeae7f3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). Source downloaded (UTC): 2026-09-10T01:30:03.342Z to 2026-09-10T01:30:03.342Z Record version: sha256:056c4b2c7094607e78be5fc0366ebb2c5badbc954767fd23720093173261a9c6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-20-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/810/20/#55-implementation-guidance-and-illustrations) SEC content: no ##### [810-20-55-1](https://asc.understandingaccounting.org/asc/810/20/#810-20-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:03.342Z to 2026-09-10T01:30:03.342Z Record version: sha256:3dad0056de116f08fcc39f4030b3d5557c0163b10987d697c14f025678aa7540 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-55-2](https://asc.understandingaccounting.org/asc/810/20/#810-20-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:03.342Z to 2026-09-10T01:30:03.342Z Record version: sha256:73cc920d04a492673231765b35ee95db1618d493d07c26ae6983525cdcec8caf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-55-3](https://asc.understandingaccounting.org/asc/810/20/#810-20-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:03.342Z to 2026-09-10T01:30:03.342Z Record version: sha256:4624c8f0962dac1798e041c1c2c51fbecd499deeee7e106c1c4e909c96865fa6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-55-4](https://asc.understandingaccounting.org/asc/810/20/#810-20-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:03.342Z to 2026-09-10T01:30:03.342Z Record version: sha256:4cb9bfb7756f9b1b3037e2860f53dc38fc2a8e67cdbac75676090e2caf8486b2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-55-5](https://asc.understandingaccounting.org/asc/810/20/#810-20-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:03.342Z to 2026-09-10T01:30:03.342Z Record version: sha256:adee66a2465bdfd826a9cffdaec2a665ddc9bdca80cf1cd444e63a3530bcb4e0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-55-6](https://asc.understandingaccounting.org/asc/810/20/#810-20-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:03.342Z to 2026-09-10T01:30:03.342Z Record version: sha256:c488783679c6a8b580e2dca2113999e633d93cdac51d7cd67a505301e2fcf1b5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-55-7](https://asc.understandingaccounting.org/asc/810/20/#810-20-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:03.342Z to 2026-09-10T01:30:03.342Z Record version: sha256:4c395f840423fdd315614eb8c5ddcf6c573aa46679bc66a689c57667658e1c8e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-55-8](https://asc.understandingaccounting.org/asc/810/20/#810-20-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:03.342Z to 2026-09-10T01:30:03.342Z Record version: sha256:5ac317ab865899283128ffc273eeba56c6c27684dcd960590a8c481d4940e83e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-55-9](https://asc.understandingaccounting.org/asc/810/20/#810-20-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:03.342Z to 2026-09-10T01:30:03.342Z Record version: sha256:5947c4b00c7a456a56328b96864d42a7065d2d08c924f7d91371056f0e28f1a6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-55-10](https://asc.understandingaccounting.org/asc/810/20/#810-20-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:03.342Z to 2026-09-10T01:30:03.342Z Record version: sha256:e04dedfda002b981043648afd362c9d317289bff9f5ecca47983801d9660d8c2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-55-11](https://asc.understandingaccounting.org/asc/810/20/#810-20-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:03.342Z to 2026-09-10T01:30:03.342Z Record version: sha256:6f14f9e6ffac6b0dbb2ea152e556b533fe404897dc6df81d41bf06b3481d4129 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-55-12](https://asc.understandingaccounting.org/asc/810/20/#810-20-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:03.342Z to 2026-09-10T01:30:03.342Z Record version: sha256:fa3e5ad5cd3fc66ec4ab5babadaba0b4e3f1e21fc8dbc9aa188970da4ec37b96 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-55-13](https://asc.understandingaccounting.org/asc/810/20/#810-20-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:03.342Z to 2026-09-10T01:30:03.342Z Record version: sha256:883b9fa91dfc3452b2351c2799c88495aa0d39ed83aef4302548b1b638409f7e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-55-14](https://asc.understandingaccounting.org/asc/810/20/#810-20-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:03.342Z to 2026-09-10T01:30:03.342Z Record version: sha256:a1beb46942c091ffe9f6b8fdc99e2c2239defd870511f183413564e52681d289 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-55-15](https://asc.understandingaccounting.org/asc/810/20/#810-20-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:03.342Z to 2026-09-10T01:30:03.342Z Record version: sha256:f0e8ddfee6601e440560177a185f6ef79893f7927d47ed163fd797f754455b10 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). ##### [810-20-55-16](https://asc.understandingaccounting.org/asc/810/20/#810-20-55-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:03.342Z to 2026-09-10T01:30:03.342Z Record version: sha256:e665a4434711ffa845c167fb191f5fe3c3f04a6c0be24fe3962aa476ecb04318 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). Source downloaded (UTC): 2026-09-10T01:30:05.404Z to 2026-09-10T01:30:33.354Z Record version: sha256:9f7a1527c1e209f26079dd56ae99d4e8b66f62567336eb1827099660710fb17d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-30: Consolidation — Research and Development Arrangements ### Machine-generated study aids ```json { "summary": "ASC 810-30 tells a sponsor how to account for a research and development arrangement in which the sponsor funds 100% of the R&D activities — typically by capitalizing a new entity (Newco) with cash and technology rights, spinning off Newco's Class A common stock to the sponsor's shareholders, and retaining a purchase option and nominal Class B shares. The sponsor reclassifies the contributed cash as restricted cash, recognizes R&D expense as the activities are performed, and records the Class A distribution as a dividend at the fair value of that stock. The Class A stock is presented as noncontrolling interest classified in equity but separate from the parent's equity, and exercise of the purchase option is accounted for like an acquisition of a noncontrolling interest.", "key_points": [ "Scope is limited to research and development arrangements in which all funds for the R&D activities are provided by the sponsor (810-30-15-2); arrangements funded by third parties fall under Subtopic 730-20 (810-30-15-3(a)).", "The VIE guidance in the Variable Interest Entities Subsections of Subtopic 810-10 must be applied first; if the legal entity is consolidated as a VIE, this Subtopic does not apply (810-30-15-3(b)).", "The sponsor must (a) reclassify cash contributed to the new entity as restricted cash at the time of distribution of the Class A common stock, (b) recognize research and development expense as the R&D activities are performed, and (c) account for the distribution of the Class A common stock as a dividend to its common stockholders (810-30-25-3).", "The dividend is measured at the fair value of the new entity's Class A common stock and recorded at the time of distribution to the sponsor's stockholders (810-30-30-1).", "If the purchase option is exercised, the excess of the exercise price over the carrying amount of the Class A common stock is allocated to assets acquired (generally in-process or completed R&D) and liabilities assumed, like an acquisition of a noncontrolling interest (810-30-35-1).", "If the purchase option expires unexercised, the Class A common stock is reclassified to additional paid-in capital as an adjustment to the initial dividend (810-30-35-1).", "The Class A common stock is presented as a noncontrolling interest classified as equity but separate from the parent's equity (810-30-45-1), and the sponsor's R&D expense is not allocated to the Class A stock in computing income available to common stockholders for EPS (810-30-45-2)." ], "categories": [ "Consolidation", "Presentation", "Recognition", "Initial measurement" ], "audience_level": "advanced", "student_note": "This is a narrow, structure-specific rule aimed at \"R&D spin-off\" vehicles used to keep development costs off the sponsor's books — the point is that the sponsor still expenses the R&D and cannot treat the spun-off entity as a true third-party funder. The most common mistake is skipping the ordering rule: you must test the new entity under the VIE guidance in 810-10 first, and only if it is not a consolidated VIE (and the sponsor provides all the funding) do you apply 810-30.", "related_topics": [ "730-20", "810-10", "808", "730-10", "805" ], "key_concepts": [ "research and development arrangement", "sponsor", "spin-off of class a common stock", "restricted cash", "dividend measured at fair value", "purchase option", "noncontrolling interest", "in-process research and development" ] } ``` Source downloaded (UTC): 2026-09-10T01:30:05.404Z to 2026-09-10T01:30:05.404Z Record version: sha256:6fa16187106b1f37d0a1c0b3c049ad41af838fc23de865a8fec50ef39cb4b70f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-30-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/810/30/#00-status) SEC content: no ##### [810-30-00-1](https://asc.understandingaccounting.org/asc/810/30/#810-30-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:05.404Z to 2026-09-10T01:30:05.404Z Record version: sha256:37666f32541db0a08a87e9728976483acb6d075aab150aebbea939b5d8fa90df 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
Fair Value (3rd def.)AddedAccounting Standards Update No. 2012-0410/01/2012
810-30-15-3AmendedAccounting Standards Update No. 2015-0202/18/2015
810-30-55-1AmendedAccounting Standards Update No. 2012-0410/01/2012
810-30-55-3AmendedAccounting Standards Update No. 2012-0410/01/2012
Source downloaded (UTC): 2026-09-10T01:30:07.115Z to 2026-09-10T01:30:07.115Z Record version: sha256:18bc632567aac38baffc258ec55fad71131d3e7b7b9c5e5dad9611038b52afc6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-30-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/810/30/#05-overview-and-background) SEC content: no ##### [810-30-05-1](https://asc.understandingaccounting.org/asc/810/30/#810-30-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:07.115Z to 2026-09-10T01:30:07.115Z Record version: sha256:715988aedd2d07b997c634c54488bb582f2349a693b296abb43889c401db74a9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on whether and how a [sponsor](https://asc.understandingaccounting.org/glossary/s/#sponsor "An entity that capitalizes a research and development arrangement.") should consolidate a research and development arrangement. The guidance follows one example throughout the Subtopic. For guidance on other issues concerning research and development arrangements, see Subtopic 730-20. ##### [810-30-05-2](https://asc.understandingaccounting.org/asc/810/30/#810-30-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:07.115Z to 2026-09-10T01:30:07.115Z Record version: sha256:4d5147b4b440552af6dfac12c7b599d498092c143dac5a2e28c689d257b0e75d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on what a research and development arrangement is, see Subtopic 730-20. An overview can be found in paragraphs [730-20-05-1 through 05-9](https://asc.understandingaccounting.org/asc/730/20/#730-20-05-1) . Source downloaded (UTC): 2026-09-10T01:30:10.769Z to 2026-09-10T01:30:10.769Z Record version: sha256:9b78aee1262106138690fbd1765d9d94217599e9ae3f86c6bd77df53b8e78ed4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-30-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/810/30/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [810-30-15-1](https://asc.understandingaccounting.org/asc/810/30/#810-30-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:10.769Z to 2026-09-10T01:30:10.769Z Record version: sha256:0ead50164567d17e3b66bedc8a60dc88bd059f018fd7a7d8e3d24728a5fbc4dc 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 810-10-15, with specific transaction qualifications and exceptions noted below. #### Transactions ##### [810-30-15-2](https://asc.understandingaccounting.org/asc/810/30/#810-30-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:10.769Z to 2026-09-10T01:30:10.769Z Record version: sha256:2827f935600a9f6b3e755d354a1fd4ba60732ece08579fb239511fc7f7fcdefa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The scope of this Subtopic is limited to those research and development arrangements in which all of the funds for the research and development activities are provided by the [sponsor](https://asc.understandingaccounting.org/glossary/s/#sponsor "An entity that capitalizes a research and development arrangement.") of the research and development arrangement. ##### [810-30-15-3](https://asc.understandingaccounting.org/asc/810/30/#810-30-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:10.769Z to 2026-09-10T01:30:10.769Z Record version: sha256:63b9670be12f6f61d566659d17d6dad39883a287fae3f2f83aa06eaa69a7a1b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic does not apply to either of the following: 1. a Transactions in which the funds are provided by third parties, which would generally be within the scope of Subtopic 730-20. That Subtopic establishes standards of financial accounting and reporting for an entity that is a party to a research and development arrangement through which it can obtain the results of research and development funded partially or entirely by others. 2. b Legal entities required to be consolidated under the guidance on variable interest entities (VIEs). That guidance must be applied first (see the [Variable Interest Entities Subsection](https://asc.understandingaccounting.org/asc/810/10/#15-scope-and-scope-exceptions) of Section 810-10-15) before considering this Subtopic. Consolidation by reporting entities of VIEs, which include many legal entities used in research and development arrangements, is addressed by the Variable Interest Entities Subsections of Subtopic 810-10. #### Other Considerations ##### [810-30-15-4](https://asc.understandingaccounting.org/asc/810/30/#810-30-15-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:10.769Z to 2026-09-10T01:30:10.769Z Record version: sha256:dfde0734ef89688d077610fc8436c6cbc5b58e9dde4a318e668f4b654d21facf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on consolidation issues; for guidance on other issues concerning research and development arrangements, see Subtopic 730-20. Source downloaded (UTC): 2026-09-10T01:30:16.002Z to 2026-09-10T01:30:16.002Z Record version: sha256:3c3e39dcbda1bf56eb5b79f85d4f65db8d4b1ddf2f594e537829dbc2f6bb778f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-30-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/810/30/#25-recognition) SEC content: no ##### [810-30-25-1](https://asc.understandingaccounting.org/asc/810/30/#810-30-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:16.002Z to 2026-09-10T01:30:16.002Z Record version: sha256:9a64a22a4e0ca4bfdbc5c23483ba81e464c7a517ba24e661f8a37c832fec5c99 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This guidance addresses transactions in which a [sponsor](https://asc.understandingaccounting.org/glossary/s/#sponsor "An entity that capitalizes a research and development arrangement.") capitalizes a new entity with cash and rights to certain technology developed by the sponsor, in exchange for Class A and Class B common stock in the new entity. The Class B common shares convey essentially no financial interest to the Sponsor and, other than certain blocking rights, provide the sponsor essentially no voting rights. The sponsor subsequently distributes the Class A common stock to its shareholders subject to a purchase option held by the sponsor. The sponsor then receives funds from the new entity to perform research and development activities. Other potential structures designed to achieve similar objectives also exist. For other types of research and development arrangements, see Subtopic 730-20. ##### [810-30-25-2](https://asc.understandingaccounting.org/asc/810/30/#810-30-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:16.002Z to 2026-09-10T01:30:16.002Z Record version: sha256:96bf18c1ded17eff273147f00cb5314972bf1c99ba5ebc5798ffebc4071c3e60 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. While a consolidation approach to the sponsor's accounting is not specified, if the incurred research and development costs were allocated to the new entity's Class B common stock held by the sponsor (because the value of the new entity's Class A common stock is derived from the sponsor's purchase option on those shares, not from the sponsor's initial funding of the new entity), the accounting that would result from consolidation would be essentially the same as that required by this Subtopic. ##### [810-30-25-3](https://asc.understandingaccounting.org/asc/810/30/#810-30-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:16.002Z to 2026-09-10T01:30:16.002Z Record version: sha256:9372552b225507d86029cc439a82f14086aed0f299a1840a9318925ec5d786e5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The sponsor of a research and development arrangement shall account for the research and development arrangement as follows: 1. a Reclassify the cash contributed to the new entity as restricted cash at the time of distribution of the new entity's Class A common stock. 2. b Recognize research and development expense as the research and development activities are performed. 3. c Account for the distribution of the new entity's Class A common stock as a dividend to common stockholders of the sponsor. Source downloaded (UTC): 2026-09-10T01:30:19.483Z to 2026-09-10T01:30:19.483Z Record version: sha256:4f887ebb324269341f1dbb9bb32bce8861103df7446b07856fc0d73a9690e4a8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-30-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/810/30/#30-initial-measurement) SEC content: no ##### [810-30-30-1](https://asc.understandingaccounting.org/asc/810/30/#810-30-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:19.483Z to 2026-09-10T01:30:19.483Z Record version: sha256:36a568e0280feaed1094deded13972ca907ea0296d791e37e2cbf7aea3412188 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amount of the dividend recognized on the distribution of the new research and development arrangement entity's Class A common stock should be based on the fair value of the new entity's Class A common stock and should be recorded at the time the [sponsor](https://asc.understandingaccounting.org/glossary/s/#sponsor "An entity that capitalizes a research and development arrangement.") distributes the new entity's Class A common stock to its stockholders. Source downloaded (UTC): 2026-09-10T01:30:23.424Z to 2026-09-10T01:30:23.424Z Record version: sha256:f8a05579669ccba7ba5dfab521ba3a7fbf551c19925d97cc46b7601a636c6bf1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-30-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/810/30/#35-subsequent-measurement) SEC content: no ##### [810-30-35-1](https://asc.understandingaccounting.org/asc/810/30/#810-30-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:23.424Z to 2026-09-10T01:30:23.424Z Record version: sha256:af81cfe69024f186608640e60657b30c88c4a04cd820ac1631f40cf003e309d8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If there is a purchase option, the [sponsor](https://asc.understandingaccounting.org/glossary/s/#sponsor "An entity that capitalizes a research and development arrangement.") of a research and development arrangement shall account for the exercise of the option to acquire the new entity's Class A common stock like the acquisition of [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."). That is, the excess of the option exercise price over the carrying amount of the new entity's Class A common stock should be allocated to the assets acquired (generally, in-process or completed research and development) and liabilities assumed (if any). However, if the sponsor does not exercise the purchase option, the new entity's Class A common stock should be reclassified to additional paid-in capital upon expiration of the option as an adjustment to the initial dividend. Example 1 (see paragraph [810-30-55-1](https://asc.understandingaccounting.org/asc/810/30/#810-30-55-1)) provides an illustration of the application of this guidance to a research and development arrangement. Source downloaded (UTC): 2026-09-10T01:30:26.100Z to 2026-09-10T01:30:26.100Z Record version: sha256:4f37505a9121ff6e04f32378128e24e7b4ef0331ddcb0ba736dbda6867e4cbe8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-30-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/810/30/#45-other-presentation-matters) SEC content: no #### Presentation of the New Entity's Common Stock by the Sponsor ##### [810-30-45-1](https://asc.understandingaccounting.org/asc/810/30/#810-30-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:26.100Z to 2026-09-10T01:30:26.100Z Record version: sha256:c459359ad6bf336bba59587c4a99f480db1974aab8ba7644ceb361ad7ef4cc4f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The new research and development arrangement entity's Class A common stock shall be presented as [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.") of the [sponsor](https://asc.understandingaccounting.org/glossary/s/#sponsor "An entity that capitalizes a research and development arrangement."), classified as equity, but separate from the parent's equity. #### EPS ##### [810-30-45-2](https://asc.understandingaccounting.org/asc/810/30/#810-30-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:26.100Z to 2026-09-10T01:30:26.100Z Record version: sha256:f392e1e524339c7ec012707d8db676e74288e057e748cfacddd96d5acc2fdc1f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The research and development expense recognized by the sponsor should not be allocated to the new entity's Class A common stock in determining net income or earnings available to common stockholders of the sponsor in the calculation of earnings per share (EPS). Source downloaded (UTC): 2026-09-10T01:30:29.540Z to 2026-09-10T01:30:29.540Z Record version: sha256:d6a50cb263f696965f2debf896bfd81f9ea7d7d4ecfe82927b22850986315c50 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-30-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/810/30/#55-implementation-guidance-and-illustrations) SEC content: no #### Illustrations ##### [810-30-55-1](https://asc.understandingaccounting.org/asc/810/30/#810-30-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:29.540Z to 2026-09-10T01:30:29.540Z Record version: sha256:5fd2c270faaa3b3d0e060568979742a5ba92a0d2e0a14b9531fb4a4e35ca3079 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in this Subtopic. A [sponsor](https://asc.understandingaccounting.org/glossary/s/#sponsor "An entity that capitalizes a research and development arrangement.") (the Sponsor) capitalizes a newly created, wholly owned [subsidiary](https://asc.understandingaccounting.org/glossary/s/#subsidiary "An entity, including an unincorporated entity such as a partnership or trust, in which another entity, known as its parent, holds a controlling financial interest. (Also, a variable interest entity that is consolidated by a primary beneficiary.)"), Newco, with $110 million and rights to certain technology developed by the Sponsor (assumed to have no book value) in exchange for Newco Class A common stock and Newco Class B common stock with a nominal [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."). Concurrent with its formation, the Sponsor and Newco enter into various agreements including a development contract and purchase option (each described in this Example). Shortly thereafter, the Sponsor distributes all of the Newco Class A common stock to the Sponsor's stockholders. The fair value of the Newco Class A common stock at distribution is $80 million. ##### [810-30-55-2](https://asc.understandingaccounting.org/asc/810/30/#810-30-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:29.540Z to 2026-09-10T01:30:29.540Z Record version: sha256:8bf95791658a3fff85e186706b1fd8db95af1ec52f5ddd5eabd23add0bc0a4fe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. After the distribution, the Sponsor owns all of the authorized shares of the Newco Class B common stock. The Newco Class B common stock conveys essentially no financial interest to the Sponsor and, other than certain blocking rights, provides the Sponsor essentially no voting rights. Under the development contract, Newco will be required to spend all of the cash contributed to it by the Sponsor (the available funds) in the research and development of technologies mutually agreed upon with the Sponsor. Newco will have no employees other than its chief executive officer and no facilities other than a nominal amount of office space. (For purposes of this Example, investment income on the available funds, the chief executive officer's salary, and office space rent are ignored.) In addition, Newco will contract with the Sponsor to perform all of Newco's research and development activities under the development contract at the Sponsor's cost plus 10 percent. Newco expects that, in paying for such activities, the available funds will be substantially exhausted within the first two years of its existence. For purposes of this Example, it is assumed that the Sponsor incurs $50 million in research and development costs for each year under the development contract. As a result, Newco pays $55 million to the Sponsor for each year of the development contract. ##### [810-30-55-3](https://asc.understandingaccounting.org/asc/810/30/#810-30-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:29.540Z to 2026-09-10T01:30:29.540Z Record version: sha256:b4aaa60fee748e071f06c58159c2937b07e0a30fb63dbf42ee80b649aef8f17a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under the purchase option, the Sponsor will have the right to purchase all of the Newco Class A common stock at an exercise price that is intended to approximate the fair value of the shares. The purchase option is exercisable at any time until the second anniversary of the distribution of the Newco Class A common stock. For purposes of this Example, 2 scenarios are assumed under the purchase option—1 in which the option is not exercised and 1 in which the option is exercised for $200 million just before the second anniversary of the distribution of the Newco Class A common stock. ##### [810-30-55-4](https://asc.understandingaccounting.org/asc/810/30/#810-30-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:29.540Z to 2026-09-10T01:30:29.540Z Record version: sha256:e52b6cac15ec65168624dd8574f953677f5ebc3dd7af22d5326a252e1301db81 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under Newco's certificate of incorporation, Newco is prohibited from taking or permitting any action inconsistent with, or that will in any way alter, the Sponsor's rights under the purchase option without the preapproval of the Sponsor. In addition, until the expiration of the purchase option, Newco may not merge, liquidate, or sell any substantial portion of its assets or amend its certificate of incorporation to alter the purchase option, Newco's authorized capitalization, or the provisions of the certificate of incorporation governing Newco's board of directors without the preapproval of the Sponsor. The journal entries to account for the research and development arrangement are presented in the following table. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-EC7C6DAE-E065-4441-B8E7-99325F7461B2-low.gif) Impact at Consolidated Sponsor Level Distribution of Newco's Class A Common Stock Restricted Cash " $110,000,000 " Cash " $110,000,000 " Common Dividend " 80,000,000 " Newco Class A Common Stock (a) " 80,000,000 " Year 1 Research and Development Research and Development Costs Incurred by the Sponsor Research and Development Expense " $50,000,000 " Cash " $50,000,000 " Reimbursement under Development Contract Cash " $55,000,000 " Restricted Cash " $55,000,000 " Year 2 Research and Development Research and Development Costs Incurred by the Sponsor Research and Development Expense " $50,000,000 " Cash " $50,000,000 " Reimbursement under Development Contract Cash " $55,000,000 " Restricted Cash " $55,000,000 " Purchase Option (Two Scenarios) Scenario 1—Option Not Exercised Newco Class A Common Stock " $80,000,000 " Additional Paid-in Capital " $80,000,000 " Scenario 2—Option Exercised In-Process or Completed Research and Development " $120,000,000 " Newco Class A Common Stock " 80,000,000 " Cash " $200,000,000 " Impact of All the Entries Scenario 1—Option Not Exercised Common Dividends " $80,000,000 " Research and Development Expense " 100,000,000 " Additional Paid-in Capital " $80,000,000 " Cash " 100,000,000 " Scenario 2—Option Exercised Common Dividends " $80,000,000 " Research and Development Expense " 100,000,000 " In-Process or Completed Research and Development " 120,000,000 " Cash " $300,000,000 " (a) Accounted for like noncontrolling interest. Source downloaded (UTC): 2026-09-10T01:30:33.354Z to 2026-09-10T01:30:33.354Z Record version: sha256:46dec4a8d012e68204e0e2b0d20cd7ae58c6ba113d4b5bae59e34531e049b42e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-30-60: 60 Relationships [Read section](https://asc.understandingaccounting.org/asc/810/30/#60-relationships) SEC content: no #### Collaborative Arrangements ##### [810-30-60-1](https://asc.understandingaccounting.org/asc/810/30/#810-30-60-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:33.354Z to 2026-09-10T01:30:33.354Z Record version: sha256:e9c539298f1613d350025a0c9bcf2084bcd67704711d27f271c73618aee96ace Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on research and development arrangements conducted as collaborative arrangements, see Topic 808. Source downloaded (UTC): 2026-09-10T01:30:36.263Z to 2026-09-10T01:30:41.942Z Record version: sha256:7f7ed8ffe12469c9c5a48ed271652a838fc0641ef8af344a23c2b45a9f1e7e52 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-910: Consolidation — Contractors—Construction ### Machine-generated study aids ```json { "summary": "This Subtopic addresses consolidation issues for construction contractors, principally the availability of proportionate gross presentation for investments in unincorporated entities (such as construction joint ventures) that are accounted for under the equity method. Per 810-910-45-1, referencing 810-10-45-14, proportionate gross presentation is generally prohibited for equity-method investments in unincorporated legal entities, but an exception exists when the investee operates in the construction industry (or an extractive industry). Its scope follows that of Subtopic 910-10 (see 910-10-15).", "key_points": [ "This Subtopic provides guidance on consolidation by a construction contractor (810-910-05-1).", "The scope is the same as the Contractors—Construction Overall Subtopic, Section 910-10-15 (810-910-15-1).", "Under 810-10-45-14, proportionate gross financial statement presentation is not appropriate for an investment in an unincorporated legal entity accounted for under the equity method, except where the investee is in the construction industry or an extractive industry (810-910-45-1).", "The extractive-industry parallels to this exception are found at 930-810-45-1 (mining) and 932-810-45-1 (oil and gas) (810-910-45-1)." ], "categories": [ "Consolidation", "Presentation", "Industry-specific", "Financial statement presentation" ], "audience_level": "intermediate", "student_note": "The exam point is narrow: proportionate (pro rata) gross presentation of an equity-method investee is a rare exception limited to unincorporated construction and extractive-industry ventures. Students often wrongly assume proportionate consolidation is generally available for any jointly controlled operation, or that it applies to incorporated joint ventures.", "related_topics": [ "810-10", "910-10", "930-810", "932-810", "323-10" ], "key_concepts": [ "proportionate gross presentation", "equity method", "unincorporated legal entity", "construction joint venture", "consolidation", "industry exception", "construction contractor" ] } ``` Source downloaded (UTC): 2026-09-10T01:30:36.263Z to 2026-09-10T01:30:36.263Z Record version: sha256:cf0ab8c97e68ce513512dcbbee7e1f3f12c682cc96f9768fb6f87bc2c634e796 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-910-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/810/910/#05-overview-and-background) SEC content: no ##### [810-910-05-1](https://asc.understandingaccounting.org/asc/810/910/#810-910-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:36.263Z to 2026-09-10T01:30:36.263Z Record version: sha256:77ab26160999c6b5eca1e33b8c62b5633dcc6e2c7cadc2e1cd576e09b79cce7a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on consolidation by a construction contractor. Source downloaded (UTC): 2026-09-10T01:30:40.092Z to 2026-09-10T01:30:40.092Z Record version: sha256:787275f85d07e72eb3df8f7b96afe89fe8d6581dbc4809e8cdaf5533c4ab8fef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-910-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/810/910/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [810-910-15-1](https://asc.understandingaccounting.org/asc/810/910/#810-910-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:40.092Z to 2026-09-10T01:30:40.092Z Record version: sha256:2dafd92a004faf7d6bf24288a9efeee1f9a2c7dd6a3da1fdb47ffaa4ff6bad90 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 910-10-15. Source downloaded (UTC): 2026-09-10T01:30:41.942Z to 2026-09-10T01:30:41.942Z Record version: sha256:4c24a9aa1c2a4a661934a4e8c5c3cd19319042b8fd4de41d265a5543cd8d33e6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-910-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/810/910/#45-other-presentation-matters) SEC content: no ##### [810-910-45-1](https://asc.understandingaccounting.org/asc/810/910/#810-910-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:41.942Z to 2026-09-10T01:30:41.942Z Record version: sha256:aba719ad8ce413bd7538cb778af204d2362fd648ef81778e5071a1a6257df608 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [810-10-45-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-14) explains that a proportionate gross financial statement presentation is not appropriate for an investment in an unincorporated legal entity accounted for by the equity method of accounting unless the investee is in either the construction industry (as discussed in this Topic) or an extractive industry (see paragraphs [930-810-45-1](https://asc.understandingaccounting.org/asc/810/930/#810-930-45-1) and [932-810-45-1](https://asc.understandingaccounting.org/asc/810/932/#810-932-45-1)). Source downloaded (UTC): 2026-09-10T01:30:44.132Z to 2026-09-10T01:30:55.736Z Record version: sha256:4de89db3cd4fe29ee537d598389aa2108e6c6afdc6e2df7bf2097280149bf588 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-915: Consolidation — Development Stage Entities ### Machine-generated study aids ```json { "summary": "ASC 810-915 was the intersection subtopic that applied the consolidation guidance of Topic 810 to development stage entities (entities devoting substantially all efforts to establishing a new business without significant revenue). Every paragraph in this subtopic — including its scope, overview, and subsequent measurement guidance — was superseded by Accounting Standards Update No. 2014-10, which eliminated the concept of a development stage entity from U.S. GAAP. There is therefore no remaining substantive guidance here; consolidation of such entities is analyzed solely under the general Topic 810 model.", "key_points": [ "All paragraphs of this subtopic (810-915-05-1, 810-915-15-1, 810-915-35-1 and 810-915-35-2) were superseded by Accounting Standards Update No. 2014-10.", "ASU 2014-10 removed the development stage entity concept from U.S. GAAP, so no separate inception-to-date or development-stage consolidation guidance survives in Topic 810.", "Entities formerly characterized as development stage entities are now consolidated (or not) under the general variable interest entity and voting interest models in Subtopics 810-10 and 810-20.", "Because the subtopic contains only superseded paragraphs, it should be cited only for historical or transition purposes, not as current authority." ], "categories": [ "Consolidation", "Transition and effective dates", "Presentation" ], "audience_level": "intermediate", "student_note": "Exam trap: candidates sometimes still apply \"development stage entity\" rules (inception-to-date columns, special VIE equity-at-risk relief); after ASU 2014-10 the concept is gone and start-up entities follow ordinary GAAP, including the standard VIE analysis of whether equity investment at risk is sufficient.", "related_topics": [ "810-10", "915", "810-20", "275" ], "key_concepts": [ "development stage entity", "superseded guidance", "consolidation", "variable interest entity", "sufficiency of equity investment at risk", "codification housekeeping" ] } ``` Source downloaded (UTC): 2026-09-10T01:30:44.132Z to 2026-09-10T01:30:44.132Z Record version: sha256:6c559f33bf3a134079a710b6a39df61083950f9d5ecc8408911c0b5e7a7783a5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-915-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/810/915/#00-status) SEC content: no ##### [810-915-00-1](https://asc.understandingaccounting.org/asc/810/915/#810-915-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:44.132Z to 2026-09-10T01:30:44.132Z Record version: sha256:0784710835365eee11e0a5a1d156623c635f4128b63e907822370eba45d8cee4 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
Development Stage EntitySupersededAccounting Standards Update No. 2014-1006/10/2014
915-810-05-1SupersededAccounting Standards Update No. 2014-1006/10/2014
915-810-15-1SupersededAccounting Standards Update No. 2014-1006/10/2014
915-810-35-1SupersededAccounting Standards Update No. 2014-1006/10/2014
915-810-35-2SupersededAccounting Standards Update No. 2014-1006/10/2014
Source downloaded (UTC): 2026-09-10T01:30:46.940Z to 2026-09-10T01:30:46.940Z Record version: sha256:db3fbcae211a8fde95c947aa84ce88f52e0a8def109be2b5b255f28f2c703f4a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-915-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/810/915/#05-overview-and-background) SEC content: no ##### [810-915-05-1](https://asc.understandingaccounting.org/asc/810/915/#810-915-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:46.940Z to 2026-09-10T01:30:46.940Z Record version: sha256:ce962f267c6c6304b508e116b11ebcd82b421a5ce25f18f9487e7b5d6962cdb7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-10](https://asc.understandingaccounting.org/updates/asu-2014-10/). Source downloaded (UTC): 2026-09-10T01:30:50.862Z to 2026-09-10T01:30:50.862Z Record version: sha256:4cf0ea1db454d769d1896134e385d1fa440b1fc20c11f1ed36db0f88ac1f40fb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-915-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/810/915/#15-scope-and-scope-exceptions) SEC content: no ##### [810-915-15-1](https://asc.understandingaccounting.org/asc/810/915/#810-915-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:50.862Z to 2026-09-10T01:30:50.862Z Record version: sha256:9bf3b2d4153c3db7a37adff23734c047ee4378419ef81dc3362f3aa0d6fa7889 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-10](https://asc.understandingaccounting.org/updates/asu-2014-10/). Source downloaded (UTC): 2026-09-10T01:30:54.000Z to 2026-09-10T01:30:54.000Z Record version: sha256:bf80daccfc71ebb0d1c9b1bcb06f8014d57392beb32471eb856fa5712af96202 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-915-20: 20 Glossary [Read section](https://asc.understandingaccounting.org/asc/810/915/#20-glossary) SEC content: no Source downloaded (UTC): 2026-09-10T01:30:55.736Z to 2026-09-10T01:30:55.736Z Record version: sha256:c00d868e4fec1c74d2e1c567a57fd8f10c966804168e5a59b271e350bab1f0b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-915-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/810/915/#35-subsequent-measurement) SEC content: no ##### [810-915-35-1](https://asc.understandingaccounting.org/asc/810/915/#810-915-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:55.736Z to 2026-09-10T01:30:55.736Z Record version: sha256:9243523db422b2d458d8806b52193f960d116b445b17392938a30d30260f6ef2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-10](https://asc.understandingaccounting.org/updates/asu-2014-10/). ##### [810-915-35-2](https://asc.understandingaccounting.org/asc/810/915/#810-915-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:55.736Z to 2026-09-10T01:30:55.736Z Record version: sha256:c7ad3f639eb44dbc85053a2479be7f4a4c1dc81d98ec278532628747254cc7b6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-10](https://asc.understandingaccounting.org/updates/asu-2014-10/). Source downloaded (UTC): 2026-09-10T01:30:58.491Z to 2026-09-10T01:31:02.882Z Record version: sha256:6e0eab0657eb52af51a65f289c523036329d978c632555921da430cda39d1f35 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-930: Consolidation — Extractive Activities—Mining ### Machine-generated study aids ```json { "summary": "This Subtopic addresses when a mining entity may use proportionate consolidation — presenting its pro rata share of an investee's assets, liabilities, revenues, and expenses on a gross basis rather than as a one-line equity method investment. Proportionate consolidation is permitted only where it has been established industry practice, and for extractive activities it is limited to unincorporated legal entities whose activities are confined to the extraction of mineral resources. Entities engaged in refining, marketing, or transporting extracted minerals are not \"in an extractive industry\" for this purpose.", "key_points": [ "Proportionate consolidation is allowed only in industries in which it has been industry practice, and this Subtopic applies that guidance to mining (810-930-05-1).", "Under paragraph 810-10-45-14, proportionate gross financial statement presentation is not appropriate for an investment in an unincorporated legal entity accounted for by the equity method unless the investee is in the construction industry (910-810-45-1) or an extractive industry (932-810-45-1) (810-930-45-1).", "An entity is in an extractive industry only if its activities are limited to the extraction of mineral resources, such as oil and gas exploration and production (810-930-45-1).", "Activities such as refining, marketing, or transporting extracted mineral resources disqualify an entity from extractive-industry treatment and thus from proportionate gross presentation (810-930-45-1).", "The scope of this Subtopic follows the Scope and Scope Exceptions of Section 930-10-15 (810-930-15-1)." ], "categories": [ "Consolidation", "Presentation", "Industry-specific", "Financial statement presentation" ], "audience_level": "intermediate", "student_note": "Proportionate consolidation is a narrow exception to the general rule that equity method investments are presented on one line; the common mistake is assuming any mining or energy company qualifies — the investee must be an unincorporated entity whose activities are limited to extraction, so downstream refining, marketing, or transport activities knock it out.", "related_topics": [ "810-10", "930-10", "932-810", "910-810", "323-10" ], "key_concepts": [ "proportionate consolidation", "pro rata gross presentation", "equity method investment", "unincorporated legal entity", "extractive industry", "mineral resources", "undivided interest", "mining joint venture" ] } ``` Source downloaded (UTC): 2026-09-10T01:30:58.491Z to 2026-09-10T01:30:58.491Z Record version: sha256:4bd71e2e0d2903e08cb93d0c7fdd526c5a3236787cdc96ca65e63b998614aef2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-930-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/810/930/#05-overview-and-background) SEC content: no ##### [810-930-05-1](https://asc.understandingaccounting.org/asc/810/930/#810-930-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:30:58.491Z to 2026-09-10T01:30:58.491Z Record version: sha256:f5bd044f0a8f909ed82bc679c9f14e6030870e54503778acbb7688d83915eff6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Proportionate consolidation is allowed in industries in which it has been industry practice. This Subtopic provides guidance on proportionate consolidation for the mining industry. Source downloaded (UTC): 2026-09-10T01:31:00.184Z to 2026-09-10T01:31:00.184Z Record version: sha256:37f1acc2f7de1bb017d7b99bf979324bf80df5c8a25d975e4d69f718b9657fe3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-930-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/810/930/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [810-930-15-1](https://asc.understandingaccounting.org/asc/810/930/#810-930-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:31:00.184Z to 2026-09-10T01:31:00.184Z Record version: sha256:237d50fddd791a4afabaabd7de25a54dd7d95043e76640342156d6a67358a1aa 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 930-10-15. Source downloaded (UTC): 2026-09-10T01:31:02.882Z to 2026-09-10T01:31:02.882Z Record version: sha256:9206f2789477c20d431a57716fa1923056068662c2bbcdda43863b3260e30efb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-930-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/810/930/#45-other-presentation-matters) SEC content: no #### Proportionate Consolidation ##### [810-930-45-1](https://asc.understandingaccounting.org/asc/810/930/#810-930-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:31:02.882Z to 2026-09-10T01:31:02.882Z Record version: sha256:49b331d1873c9ff058788a22844bcc75cad40bf81915937cf8909fad623f0055 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [810-10-45-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-14) explains that a proportionate gross financial statement presentation is not appropriate for an investment in an unincorporated legal entity accounted for by the equity method of accounting unless the investee is in either the construction industry (see paragraph [910-810-45-1](https://asc.understandingaccounting.org/asc/810/910/#810-910-45-1)) or an extractive industry (as discussed in this Topic and paragraph [932-810-45-1](https://asc.understandingaccounting.org/asc/810/932/#810-932-45-1)). As indicated in that paragraph, an entity is in an extractive industry only if its activities are limited to the extraction of mineral resources (such as oil and gas exploration and production) and not if its activities involve related activities such as refining, marketing, or transporting extracted mineral resources. Source downloaded (UTC): 2026-09-10T01:31:06.373Z to 2026-09-10T01:31:16.096Z Record version: sha256:a2dd9e01e150d7d590dd1940168f9cba3642d0103cb88b6a8f23caeb3dc4278e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-932: Consolidation — Extractive Activities—Oil and Gas ### Machine-generated study aids ```json { "summary": "This Subtopic permits proportionate consolidation (a proportionate gross presentation of assets, liabilities, revenues, and expenses) for oil and gas ventures, an exception to the general rule that equity method investments in unincorporated entities are presented on a one-line basis. It applies only where proportionate consolidation is established industry practice, and the oil and gas industry is such an industry.", "key_points": [ "Proportionate consolidation is allowed in industries where it has been industry practice, and the oil and gas industry is one such industry (810-932-05-1).", "The scope follows Section 932-10-15, the Overall Extractive Activities—Oil and Gas Subtopic scope (810-932-15-1).", "Under paragraph 810-10-45-14, proportionate gross financial statement presentation is not appropriate for an investment in an unincorporated legal entity accounted for by the equity method unless the investee is in the construction industry or an extractive industry (810-932-45-1).", "An entity qualifies as being in an extractive industry only if its activities are limited to the extraction of mineral resources, such as oil and gas exploration and production (810-932-45-1).", "Activities such as refining, marketing, or transporting extracted mineral resources disqualify an entity from the extractive-industry exception (810-932-45-1).", "A parallel exception for mining entities is found in paragraph 930-810-45-1 (810-932-45-1)." ], "categories": [ "Consolidation", "Presentation", "Industry-specific", "Financial statement presentation" ], "audience_level": "intermediate", "student_note": "This is a narrow, exam-friendly exception: proportionate consolidation is generally prohibited, but oil and gas (and construction and mining) ventures may use it. The common mistake is applying the exception to an integrated energy company—the exception is lost once the entity refines, markets, or transports the extracted resources.", "related_topics": [ "810-10", "932-10", "930-810", "323-10", "932-360" ], "key_concepts": [ "proportionate consolidation", "equity method investment", "unincorporated legal entity", "extractive industry", "oil and gas exploration and production", "gross financial statement presentation", "undivided interest" ] } ``` Source downloaded (UTC): 2026-09-10T01:31:06.373Z to 2026-09-10T01:31:06.373Z Record version: sha256:3ff98572785693786f552d99e6408709cecac6db90f344cd84faef3fb897998c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-932-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/810/932/#00-status) SEC content: no ##### [810-932-00-1](https://asc.understandingaccounting.org/asc/810/932/#810-932-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:31:06.373Z to 2026-09-10T01:31:06.373Z Record version: sha256:05f9dc2e05b6345e0e57eb0931160335ec4b5eea7a5c6eca3e3fe873c11ff2aa 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
ProductionAmendedAccounting Standards Update No. 2010-0301/06/2010
Source downloaded (UTC): 2026-09-10T01:31:09.962Z to 2026-09-10T01:31:09.962Z Record version: sha256:e544fd750c12281e186ea5bd7a130da845952c59141c3576c46fbaffd140d12d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-932-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/810/932/#05-overview-and-background) SEC content: no ##### [810-932-05-1](https://asc.understandingaccounting.org/asc/810/932/#810-932-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:31:09.962Z to 2026-09-10T01:31:09.962Z Record version: sha256:980cf3e0bc75aed22ed1b0d432a641ca2ef0263a41f5cbce55e27cd79a97d4ec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses proportionate consolidation, which is allowed in industries in which it has been industry practice. The oil and gas industry is one of the industries in which this is an allowed practice. Source downloaded (UTC): 2026-09-10T01:31:12.128Z to 2026-09-10T01:31:12.128Z Record version: sha256:e0487e3ba8ee9404492d49d10c0247141e3ae39933e7bd9b70f62e368b09f345 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-932-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/810/932/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [810-932-15-1](https://asc.understandingaccounting.org/asc/810/932/#810-932-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:31:12.128Z to 2026-09-10T01:31:12.128Z Record version: sha256:4a2ceb32c9b57ebc0d37ea28aac7232cfd9cfe5497c5fa65465e8b892ebaab2d 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 932-10-15. Source downloaded (UTC): 2026-09-10T01:31:16.096Z to 2026-09-10T01:31:16.096Z Record version: sha256:3cc1f42250fa8c4fbce87961a67f5715f0567be0582a58c916f5ec4bea4f771d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-932-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/810/932/#45-other-presentation-matters) SEC content: no #### Proportionate Consolidation ##### [810-932-45-1](https://asc.understandingaccounting.org/asc/810/932/#810-932-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:31:16.096Z to 2026-09-10T01:31:16.096Z Record version: sha256:d892c818c1f80bbc53b2f92ddd2eb5054f02b0428b04ebe2d61cc5664cc4dfc8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [810-10-45-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-14) explains that a proportionate gross financial statement presentation is not appropriate for an investment in an unincorporated legal entity accounted for by the equity method of accounting unless the investee is in either the construction industry or an extractive industry (as discussed in this Topic and paragraph [930-810-45-1](https://asc.understandingaccounting.org/asc/810/930/#810-930-45-1)). As indicated in that paragraph, an entity is in an extractive industry only if its activities are limited to the extraction of mineral resources (such as oil and gas [exploration](https://asc.understandingaccounting.org/glossary/e/#exploration "Exploration involves both of the following: Identifying areas that may warrant examination Examining specific areas that are considered to have prospects of containing oil and gas reserves, including drilling exploratory wells and exploratory-type stratigraphic test wells.") and [production](https://asc.understandingaccounting.org/glossary/p/#production "Production involves lifting the crude oil and natural gas to the surface, extracting saleable hydrocarbons, in the solid, liquid, or gaseous state from oil sands, shale, coalbeds, or other nonrenewable natural resources that are intended to be upgraded into synthetic oil or gas, gathering, treating, field processing (as in the case of processing gas to extract liquid hydrocarbons), and field storage. The oil and gas production function shall be regarded as ending at a terminal point, which is the outlet valve on the lease or field storage tank. If unusual physical or operational circumstances exist, it may be appropriate to regard the terminal point for the production function as: The first point at which oil, gas, or gas liquids, natural or synthetic, are delivered to a main pipeline, a common carrier, a refinery, or a marine terminal In the case of natural resources that are intended to be upgraded into synthetic oil or gas, if those natural resources are delivered to a purchaser before upgrading, the first point at which the natural resources are delivered to a main pipeline, a common carrier, a refinery, a marine terminal, or a facility that upgrades such natural resources into synthetic oil or gas.")) and not if its activities involve related activities such as refining, marketing, or transporting extracted mineral resources. Source downloaded (UTC): 2026-09-10T01:31:19.412Z to 2026-09-10T01:31:31.139Z Record version: sha256:c43d51f2a72e7562c7c0ff11254af7a179a86894bf88318789988db2cb872825 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-940: Consolidation — Financial Services—Brokers and Dealers ### Machine-generated study aids ```json { "summary": "This Subtopic gives the industry-specific consolidation guidance for brokers and dealers in securities. Its single substantive rule is a presentation exception: a broker-dealer parent within the scope of Topic 940 does not consolidate a majority-owned subsidiary in which it has a controlling financial interest (and that is not a variable interest entity) when control is likely to be temporary (810-940-45-1, cross-referencing 810-10-15-10(a)(2)).", "key_points": [ "The Subtopic addresses consolidation by brokers and dealers in securities (810-940-05-1).", "Scope follows the Overall broker-dealer Subtopic, Section 940-10-15 (810-940-15-1).", "Under 810-940-45-1 (citing 810-10-15-10(a)(2)), a majority-owned entity in which a broker-dealer parent has a controlling financial interest is not consolidated if control is likely to be temporary.", "The temporary-control exception applies only to entities outside the scope of the Variable Interest Entities Subsections of Section 810-10-15; VIEs are still evaluated under the VIE model.", "The exception is available only to a parent that is itself a broker-dealer within the scope of Topic 940." ], "categories": [ "Consolidation", "Industry-specific", "Presentation" ], "audience_level": "intermediate", "student_note": "Exam questions often test the narrow \"control is likely to be temporary\" exception—remember it is limited to broker-dealer parents under Topic 940 and to non-VIEs; a common error is assuming any parent can avoid consolidation because control is short-lived.", "related_topics": [ "810-10", "940-10", "940-810", "323-10", "825-10" ], "key_concepts": [ "broker-dealer", "controlling financial interest", "majority-owned subsidiary", "temporary control", "consolidation exception", "variable interest entity" ] } ``` Source downloaded (UTC): 2026-09-10T01:31:19.412Z to 2026-09-10T01:31:19.412Z Record version: sha256:6719fc3e3457e5fdd83566f38038823a49ac317cd30e6b42b8ffd14f24eefa20 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-940-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/810/940/#00-status) SEC content: no ##### [810-940-00-1](https://asc.understandingaccounting.org/asc/810/940/#810-940-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:31:19.412Z to 2026-09-10T01:31:19.412Z Record version: sha256:4f4f3eccc6c08e92fbf62ee966dc0575a54f66a315be6ad73e9005d767011bbf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. No updates have been made to this subtopic. Source downloaded (UTC): 2026-09-10T01:31:21.796Z to 2026-09-10T01:31:21.796Z Record version: sha256:1160e26227852843fd4346ab4f86a242ad261517d7381bdb7f85d5d16847e0db Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-940-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/810/940/#05-overview-and-background) SEC content: no ##### [810-940-05-1](https://asc.understandingaccounting.org/asc/810/940/#810-940-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:31:21.796Z to 2026-09-10T01:31:21.796Z Record version: sha256:ee6dd30480b977323351e995d582acdda8fd4656af91e07cc8942734cc7dc324 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses consolidation by brokers and dealers in securities (broker-dealers). Source downloaded (UTC): 2026-09-10T01:31:23.864Z to 2026-09-10T01:31:23.864Z Record version: sha256:48e3b5d4014a889d203dc294ebdff4fbed7e2e4a25b63eaf03a59ea7cab6a2f8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-940-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/810/940/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [810-940-15-1](https://asc.understandingaccounting.org/asc/810/940/#810-940-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:31:23.864Z to 2026-09-10T01:31:23.864Z Record version: sha256:544905580971efca67c180868b72643c1ce4c2bc0b4fcb30aca191f9be200f20 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 940-10-15. Source downloaded (UTC): 2026-09-10T01:31:27.138Z to 2026-09-10T01:31:27.138Z Record version: sha256:2a1c94f31d9eb7d110507da08065a838eaa0b41cf901e3f098782b437d85a561 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-940-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/810/940/#45-other-presentation-matters) SEC content: no ##### [810-940-45-1](https://asc.understandingaccounting.org/asc/810/940/#810-940-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:31:27.138Z to 2026-09-10T01:31:27.138Z Record version: sha256:04be872cd6300bba34d684e50255e0ab52a54de0f3bc582cf7d0bb3e1cb0739f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [810-10-15-10(a)(2)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-10) states that a majority-owned entity that is not in the scope of the [Variable Interest Entities Subsection](https://asc.understandingaccounting.org/asc/810/10/#15-scope-and-scope-exceptions) of Section 810-10-15 and in which a parent has a controlling financial interest shall not be consolidated if the parent is a broker-dealer within the scope of Topic 940 and control is likely to be temporary. Source downloaded (UTC): 2026-09-10T01:31:31.139Z to 2026-09-10T01:31:31.139Z Record version: sha256:cae76c22c3d68a492fe8a89926b206f0fdaf6d8f130b40fad8aa8d701614622b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-940-S40: SEC 40 Derecognition [Read section](https://asc.understandingaccounting.org/asc/810/940/#sec-40-derecognition) SEC content: yes #### Certain Transfers of Nonperforming Assets ##### [810-940-S40-1](https://asc.understandingaccounting.org/asc/810/940/#810-940-S40-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:31:31.139Z to 2026-09-10T01:31:31.139Z Record version: sha256:afbd9b625a59375af7b9546de03bde534edf815b5e1155536aebfbfab32874f8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [942-810-S99-1](https://asc.understandingaccounting.org/asc/810/942/#810-942-S99-1), SAB Topic 5.V, for SEC Staff views on accounting for certain transfers of nonperforming assets. Source downloaded (UTC): 2026-09-10T01:31:33.467Z to 2026-09-10T01:32:02.692Z Record version: sha256:d3e28d5d700c6a4e9e39397a4616e41ceb24da1ead83f9d4019472ee38688de2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-942: Consolidation — Financial Services—Depository and Lending ### Machine-generated study aids ```json { "summary": "This Subtopic tells bank holding companies how to present trust-preferred securities structures. Because the sponsoring bank holds no variable interest in the special-purpose trust, it cannot be the trust's primary beneficiary and does not consolidate it (810-942-55-2). Instead, the bank reports the subordinated debentures it issued to the trust as debt on its balance sheet, and accounts for its holding of the trust's common securities under the equity method (810-942-45-1).", "key_points": [ "The Subtopic provides presentation and disclosure guidance concerning trust-preferred securities (810-942-05-1) and follows the scope in Section 942-10-15 (810-942-15-1).", "In the typical trust-preferred arrangement the bank holds no variable interest in the trust and therefore cannot be the trust's primary beneficiary (810-942-45-1).", "A sponsoring bank or holding company shall not consolidate the trust because the trust is a VIE of which the sponsor is not the primary beneficiary (810-942-55-2).", "If the trust is not consolidated, the bank or holding company reports its debt issued to the trust and an equity-method investment in the common stock of the trust (810-942-45-1).", "In the typical structure the trust issues common securities (all held by the holding company) and trust-preferred securities (sold to investors), and its only assets are deeply subordinated debentures of the corporate issuer (810-942-55-1).", "Interest paid by the holding company on the subordinated debentures funds the trust's dividends on the trust-preferred securities; the debentures have a stated maturity, may include an embedded call option, and the trust-preferred securities are usually subject to mandatory redemption upon repayment of the debentures (810-942-55-1).", "Paragraph 810-942-45-2 was superseded by ASU No. 2013-07." ], "categories": [ "Consolidation", "Presentation", "Debt and equity", "Industry-specific" ], "audience_level": "intermediate", "student_note": "This is the classic exam illustration of a VIE that is *not* consolidated by its sponsor: the holding company's own debt is the trust's only asset, so the sponsor absorbs no variability from the trust. The common misunderstanding is assuming that sponsorship plus ownership of 100% of the trust's common securities forces consolidation — it does not; the debentures stay on the balance sheet as debt and the common securities are carried under the equity method.", "related_topics": [ "810-10", "942-10", "323-10", "470-10", "825-10" ], "key_concepts": [ "trust-preferred securities", "variable interest entity", "primary beneficiary", "special-purpose entity", "subordinated debentures", "equity method investment", "regulatory capital", "bank holding company" ] } ``` Source downloaded (UTC): 2026-09-10T01:31:33.467Z to 2026-09-10T01:31:33.467Z Record version: sha256:f6f1e9af15eeb15845a64daf7c5db7fe3b4258fcfaad134ec87ee6f411719aef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-942-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/810/942/#00-status) SEC content: no ##### [810-942-00-1](https://asc.understandingaccounting.org/asc/810/942/#810-942-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:31:33.467Z to 2026-09-10T01:31:33.467Z Record version: sha256:8a737f82322af14521f287f75697482dcfbaf18e0f19c38b1d69c3691e96f164 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
Liquidating BankSupersededAccounting Standards Update No. 2013-0704/22/2013
942-810-05-1AmendedAccounting Standards Update No. 2013-0704/22/2013
942-810-45-2SupersededAccounting Standards Update No. 2013-0704/22/2013
Source downloaded (UTC): 2026-09-10T01:31:37.026Z to 2026-09-10T01:31:37.026Z Record version: sha256:9464817baa1d5abc4d6527bd5bfdeda77b31dda4c3b9d28219646fceb974c305 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-942-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/810/942/#05-overview-and-background) SEC content: no ##### [810-942-05-1](https://asc.understandingaccounting.org/asc/810/942/#810-942-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:31:37.026Z to 2026-09-10T01:31:37.026Z Record version: sha256:1229c1252bc3dfaf023008560a05feabd7036313fc71c134294cdc24346215b6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides presentation and disclosure guidance concerning trust-preferred securities. Source downloaded (UTC): 2026-09-10T01:31:39.272Z to 2026-09-10T01:31:39.272Z Record version: sha256:54c3134bbc0a66651866dc6e0ad4d03b2d51ecbd9798f9d2341157972697aed5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-942-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/810/942/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [810-942-15-1](https://asc.understandingaccounting.org/asc/810/942/#810-942-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:31:39.272Z to 2026-09-10T01:31:39.272Z Record version: sha256:ea3b60457c1644405978d24b4a61e748746f70ffefaa4e8aecb8e79d9a63b87b 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 942-10-15. Source downloaded (UTC): 2026-09-10T01:31:42.993Z to 2026-09-10T01:31:42.993Z Record version: sha256:bf80daccfc71ebb0d1c9b1bcb06f8014d57392beb32471eb856fa5712af96202 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-942-20: 20 Glossary [Read section](https://asc.understandingaccounting.org/asc/810/942/#20-glossary) SEC content: no Source downloaded (UTC): 2026-09-10T01:31:45.670Z to 2026-09-10T01:31:45.670Z Record version: sha256:0c57297e793739fb87c46269f8b0049987105cddf68ff6d517caf0b1d363a27b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-942-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/810/942/#45-other-presentation-matters) SEC content: no #### Trust-Preferred Arrangements ##### [810-942-45-1](https://asc.understandingaccounting.org/asc/810/942/#810-942-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:31:45.670Z to 2026-09-10T01:31:45.670Z Record version: sha256:9a86d6a1114c7c1f95677d787b0e02c4c48df5a33244e077f261cd686a3d4cd2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In the typical trust-preferred arrangement, the bank holds no variable interest in the trust, and therefore, cannot be the trust's primary beneficiary. If the bank does not consolidate the trust, the bank or holding company shall report its debt issued to the trust and an equity-method investment in the common stock of the trust. ##### [810-942-45-2](https://asc.understandingaccounting.org/asc/810/942/#810-942-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:31:45.670Z to 2026-09-10T01:31:45.670Z Record version: sha256:9aa64a1e4e7aff9212d055230bc579df974b981fed9796691a85c40e1fa3fbda Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2013-07](https://asc.understandingaccounting.org/updates/asu-2013-07/). Source downloaded (UTC): 2026-09-10T01:31:49.616Z to 2026-09-10T01:31:49.616Z Record version: sha256:afccd2313a2e82947c1b8d228dc1299fb1223fb078e2e54924b45b7343d389a5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-942-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/810/942/#55-implementation-guidance-and-illustrations) SEC content: no #### Trust-Preferred Securities ##### [810-942-55-1](https://asc.understandingaccounting.org/asc/810/942/#810-942-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:31:49.616Z to 2026-09-10T01:31:49.616Z Record version: sha256:f2e2f766e58e2fa8afad4ba02e8d665c932bfbe7b126e72d4e808c344bfad6dc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Trust-preferred securities have been issued by banks for a number of years due to favorable regulatory capital treatment. Various trust-preferred structures have been developed involving minor differences in terms. Under the typical structure, a bank holding company first organizes a business trust or other special-purpose entity. This trust issues two classes of securities: common securities, all of which are purchased and held by the bank holding company, and trust-preferred securities, which are sold to investors. The trust's only assets are deeply subordinated debentures of the corporate issuer, which the trust purchases with the proceeds from the sale of its common and preferred securities. The bank holding company makes periodic interest payments on the subordinated debentures to the business trust, which uses these payments to pay periodic dividends on the trust-preferred securities to the investors. The subordinated debentures have a stated maturity and may include an embedded call option. Most trust-preferred securities are subject to a mandatory redemption upon the repayment of the debentures. ##### [810-942-55-2](https://asc.understandingaccounting.org/asc/810/942/#810-942-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:31:49.616Z to 2026-09-10T01:31:49.616Z Record version: sha256:a864100bba4a99284250d87f96d121d4fbab424501b9b049a42fcc83ce4090c6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under the provisions of Topic 810, a bank or holding company that sponsored a structure described in the preceding paragraph shall not consolidate the trust because the trust is a variable interest entity (VIE) and the bank or holding company is not the primary beneficiary of that VIE. Source downloaded (UTC): 2026-09-10T01:31:53.351Z to 2026-09-10T01:31:53.351Z Record version: sha256:2146e89e35a1f342ff9bda30da8597b4899773d04bd2f269cb9f5ac5dd582bb7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-942-S00: SEC 00 Status [Read section](https://asc.understandingaccounting.org/asc/810/942/#sec-00-status) SEC content: yes ##### [810-942-S00-1](https://asc.understandingaccounting.org/asc/810/942/#810-942-S00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:31:53.351Z to 2026-09-10T01:31:53.351Z Record version: sha256:9d1aec2e8d8e7a5f8dcec5571d7db1b5395b37bd13efd9c97bbff834414f2a3d 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
942-810-S99-1AmendedAccounting Standards Update No. 2012-0308/27/2012
Source downloaded (UTC): 2026-09-10T01:31:57.425Z to 2026-09-10T01:31:57.425Z Record version: sha256:aba0e7b3d3b2486a8e2e8078a1b5a51474ed11279303c0db9b1d8f286f7b6a86 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-942-S25: SEC 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/810/942/#sec-25-recognition) SEC content: yes #### Consolidation of a Subsidiary When a Decision Requiring Divestiture Has Been Made or Is Likely to Be Necessary ##### [810-942-S25-1](https://asc.understandingaccounting.org/asc/810/942/#810-942-S25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:31:57.425Z to 2026-09-10T01:31:57.425Z Record version: sha256:4a1e7a1e0bc373c9e2712a0ea9859c35df7c015eeba01a827c4872ba4a1359ac Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [810-10-S99-2](https://asc.understandingaccounting.org/asc/810/10/#810-10-S99-2), Regulation S-X Rule 3A-02(c), for rules pertaining to consolidation of a subsidiary of a registrant subject to the Bank Holding Company Act of 1956 when a decision requiring divestiture has been made or is likely to be necessary. Source downloaded (UTC): 2026-09-10T01:32:00.190Z to 2026-09-10T01:32:00.190Z Record version: sha256:2f6d6006fca53b4fc9a885630c1002e1f7f58e664843e0764632f0f171b47ea6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-942-S40: SEC 40 Derecognition [Read section](https://asc.understandingaccounting.org/asc/810/942/#sec-40-derecognition) SEC content: yes #### Certain Transfers of Nonperforming Assets ##### [810-942-S40-1](https://asc.understandingaccounting.org/asc/810/942/#810-942-S40-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:00.190Z to 2026-09-10T01:32:00.190Z Record version: sha256:3de407d02547d496399578d038828d6d0a9cea3dc2fa15a7f56a2d82f8ac4f93 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [942-810-S99-1](https://asc.understandingaccounting.org/asc/810/942/#810-942-S99-1), SAB Topic 5.V, for SEC Staff views on accounting for certain transfers of nonperforming assets. Source downloaded (UTC): 2026-09-10T01:32:02.692Z to 2026-09-10T01:32:02.692Z Record version: sha256:fee47453829ce087571b7e5deb10afd11e3ea9b35d7d09318f50ae579f61c1fa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-942-S99: SEC 99 SEC Materials [Read section](https://asc.understandingaccounting.org/asc/810/942/#sec-99-sec-materials) SEC content: yes #### SEC Staff Guidance ##### [810-942-S99-1](https://asc.understandingaccounting.org/asc/810/942/#810-942-S99-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:02.692Z to 2026-09-10T01:32:02.692Z Record version: sha256:01155c0cd5693d550c0f6eaf4dd007fde780665f6234e0ac59b3adbc19a20613 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of SAB Topic 5.V, Certain Transfer of Non-performing Assets. - Facts: A financial institution desires to reduce its nonaccrual or reduced rate loans and other nonearning assets, including foreclosed real estate (collectively, "nonperforming assets"). Some or all of such nonperforming assets are transferred to a newly-formed entity (the "new entity"). The financial institution, as consideration for transferring the nonperforming assets, may receive (a) the cash proceeds of debt issued by the new entity to third parties, (b) a note or other redeemable instrument issued by the new entity, or (c) a combination of (a) and (b). The residual equity interests in the new entity, which carry voting rights, initially owned by the financial institution, are transferred to outsiders (for example, via distribution to the financial institution's shareholders or sale or contribution to an unrelated third party). - The financial institution typically will manage the assets for a fee, providing necessary services to liquidate the assets, but otherwise does not have the right to appoint directors or legally control the operations of the new entity. - FASB ASC Topic 860, Transfers and Servicing, provides guidance for determining when a transfer of financial assets can be recognized as a sale. The interpretive guidance provided in response to Questions 1 and 2 of this SAB does not apply to transfers of financial assets falling within the scope of FASB ASC Topic 860. Because FASB ASC Topic 860 does not apply to distributions of financial assets to shareholders or a contribution of such assets to unrelated third parties, the interpretive guidance provided in response to Questions 1 and 2 of this SAB would apply to such conveyances. - Further, registrants should consider the guidance contained in FASB ASC Topic 810, Consolidation, in determining whether it should consolidate the newly-formed entity. - Question 1: What factors should be considered in determining whether such transfer of nonperforming assets can be accounted for as a disposition by the financial institution? - Interpretive Response: The staff believes that determining whether nonperforming assets have been disposed of in substance requires an assessment as to whether the risks and rewards of ownership have been transferred. FN38 The staff believes that the transfer described should not be accounted for as a sale or disposition if (a) the transfer of nonperforming assets to the new entity provides for recourse by the new entity to the transferor financial institution, (b) the financial institution directly or indirectly guarantees debt of the new entity in whole or in part, (c) the financial institution retains a participation in the rewards of ownership of the transferred assets, for example through a higher than normal incentive or other management fee arrangement, FN39 or (d) the fair value of any material non-cash consideration received by the financial institution (for example, a note or other redeemable instrument) cannot be reasonably estimated. Additionally, the staff believes that the accounting for the transfer as a sale or disposition generally is not appropriate where the financial institution retains rewards of ownership through the holding of significant residual equity interests or where third party holders of such interests do not have a significant amount of capital at risk. - FN38 \[Original footnote removed by SAB 114.\] - FN39 The staff recognizes that the determination of whether the financial institution retains a participation in the rewards of ownership will require an analysis of the facts and circumstances of each individual transaction. Generally, the staff believes that, in order to conclude that the financial institution has disposed of the assets in substance, the management fee arrangement should not enable the financial institution to participate to any significant extent in the potential increases in cash flows or value of the assets, and the terms of the arrangement, including provisions for discontinuance of services, must be substantially similar to management arrangements with third parties. - Where accounting for the transfer as a sale or disposition is not appropriate, the nonperforming assets should remain on the financial institution's balance sheet and should continue to be disclosed as nonaccrual, past due, restructured or foreclosed, as appropriate, and the debt of the new entity should be recorded by the financial institution. - Question 2: If the transaction is accounted for as a sale to an unconsolidated party, at what value should the transfer be recorded by the financial institution? - Interpretive Response: The staff believes that the transfer should be recorded by the financial institution at the fair value of assets transferred (or, if more clearly evident, the fair value of assets received) and a loss recognized by the financial institution for any excess of the net carrying value FN40 over the fair value. FN41 Fair value is the amount that would be realizable in an outright sale to an unrelated third party for cash. FN42 The same concepts should be applied in determining fair value of the transferred assets, i.e., if an active market exists for the assets transferred, then fair value is equal to the market value. If no active market exists, but one exists for similar assets, the selling prices in that market may be helpful in estimating the fair value. If no such market price is available, a forecast of expected cash flows, discounted at a rate commensurate with the risks involved, may be used to aid in estimating the fair value. In situations where discounted cash flows are used to estimate fair value of nonperforming assets, the staff would expect that the interest rate used in such computations will be substantially higher than the cost of funds of the financial institution and appropriately reflect the risk of holding these nonperforming assets. Therefore, the fair value determined in such a way will be lower than the amount at which the assets would have been carried by the financial institution had the transfer not occurred, unless the financial institution had been required under GAAP to carry such assets at market value or the lower of cost or market value. - FN40 The carrying value should be reduced by any allocable allowance for credit losses or other valuation allowances. The staff believes that the loss recognized for the excess of the net carrying value over the fair value should be considered a credit loss and this should not be included by the financial institution as loss on disposition. - FN41 The staff notes that FASB ASC paragraph [942-810-45-2](https://asc.understandingaccounting.org/asc/810/942/#810-942-45-2) (Financial Services—Depository and Lending Topic) provides guidance that the newly created "liquidating bank" should continue to report its assets and liabilities at fair values at the date of the financial statements. - FN42 FASB ASC paragraph [845-10-30-14](https://asc.understandingaccounting.org/asc/845/10/#845-10-30-14) (Nonmonetary Transactions Topic) provides guidance that an enterprise that distributes loans to its owners should report such distribution at fair value. - Question 3: Where the transaction may appropriately be accounted for as a sale to an unconsolidated party and the financial institution receives a note receivable or other redeemable instrument from the new entity, how should such asset be disclosed pursuant to Item III C, "Risk Elements," of Industry Guide 3? What factors should be considered related to the subsequent accounting for such instruments received? - Interpretive Response: The staff believes that the financial institution may exclude the note receivable or other asset from its Risk Elements disclosures under Guide 3 provided that: (a) the receivable itself does not constitute a nonaccrual, past due, restructured, or potential problem loan that would require disclosure under Guide 3, and (b) the underlying collateral is described in sufficient detail to enable investors to understand the nature of the note receivable or other asset, if material, including the extent of any over-collateralization. The description of the collateral normally would include material information similar to that which would be provided if such assets were owned by the financial institution, including pertinent Risk Element disclosures. - The staff notes that, in situations in which the transaction is accounted for as a sale to an unconsolidated party and a portion of the consideration received by the registrant is debt or another redeemable instrument, careful consideration must be given to the appropriateness of recording profits on the management fee arrangement, or interest or dividends on the instrument received, including consideration of whether it is necessary to defer such amounts or to treat such payments on a cost recovery basis. Further, if the new entity incurs losses to the point that its permanent equity based on GAAP is eliminated, it would ordinarily be necessary for the financial institution, at a minimum, to record further operating losses as its best estimate of the loss in realizable value of its investment. FN43 - FN43 Typically, the financial institution's claim on the new entity is subordinate to other debt instruments and thus the financial institution will incur any losses beyond those incurred by the permanent equity holders. Source downloaded (UTC): 2026-09-10T01:32:06.472Z to 2026-09-10T01:32:24.826Z Record version: sha256:c2f5550289eca59edc135d5d87e1b355aeb328afe0c7fe09fce3766b6eb66cd1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-946: Consolidation — Financial Services—Investment Companies ### Machine-generated study aids ```json { "summary": "This Subtopic tells an investment company (as defined in Topic 946) when consolidation applies. The general rule: an investment company does not consolidate an investee that is not itself an investment company, even if it holds a controlling financial interest; instead that interest is measured at fair value under Subtopic 946-320. The one exception is a controlling financial interest in an operating entity that provides services to the investment company (e.g., an investment adviser or transfer agent), which must be consolidated.", "key_points": [ "Consolidation by an investment company of an investee that is not an investment company is not appropriate; the controlling financial interest is instead measured at fair value under Subtopic 946-320 (810-946-45-2).", "Investments in debt and equity securities held by an investment company are subsequently measured at fair value rather than consolidated (810-946-45-2).", "Exception: if an investment company holds a controlling financial interest in an operating entity that provides services to it (investment adviser, transfer agent), it must consolidate that investee rather than carry it at fair value (810-946-45-3; see 946-10-55-5).", "The rationale for the exception is that the purpose of such an investment is to obtain services, not to realize a gain on sale of the investment (810-946-45-3).", "Scope follows the Overall Subtopic scope for investment companies in Section 946-10-15 (810-946-15-1).", "Much of the former guidance (presentation paragraphs 45-4 through 45-24, disclosures 50-1 through 50-4, and implementation guidance 55-1 through 55-12) was superseded by ASU 2013-08." ], "categories": [ "Consolidation", "Fair value", "Industry-specific", "Subsequent measurement" ], "audience_level": "intermediate", "student_note": "Exam trap: control normally forces consolidation, but investment companies are the classic carve-out — a majority-owned portfolio company stays at fair value. Remember the flip side: a controlled service provider (adviser, transfer agent) IS consolidated because the investment exists to provide services, not investment returns.", "related_topics": [ "946-10", "946-320", "810-10", "820" ], "key_concepts": [ "investment company", "controlling financial interest", "consolidation exception", "fair value measurement of investments", "operating entity providing services", "investment adviser", "transfer agent" ] } ``` Source downloaded (UTC): 2026-09-10T01:32:06.472Z to 2026-09-10T01:32:06.472Z Record version: sha256:edf01741f48f378f788659f7b7e7da0feafccca5c30ee7bdec065393d0a8d3ce Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-946-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/810/946/#00-status) SEC content: no ##### [810-946-00-1](https://asc.understandingaccounting.org/asc/810/946/#810-946-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:06.472Z to 2026-09-10T01:32:06.472Z Record version: sha256:4fcb39626ee51efdb30f6941350ee289ee4459424eba42aa58b3f6146d0cc0f5 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
Investment CompanySupersededAccounting Standards Update No. 2013-0806/07/2013
Related PartiesSupersededAccounting Standards Update No. 2013-0806/07/2013
946-810-05-1AmendedAccounting Standards Update No. 2013-0806/07/2013
946-810-15-1AmendedAccounting Standards Update No. 2013-0806/07/2013
946-810-15-2SupersededAccounting Standards Update No. 2013-0806/07/2013
946-810-45-1SupersededAccounting Standards Update No. 2013-0806/07/2013
946-810-45-2AmendedAccounting Standards Update No. 2013-0806/07/2013
946-810-45-3AmendedAccounting Standards Update No. 2013-0806/07/2013
946-810-45-4 through 45-24SupersededAccounting Standards Update No. 2013-0806/07/2013
946-810-50-1 through 50-4SupersededAccounting Standards Update No. 2013-0806/07/2013
946-810-55-1 through 55-12SupersededAccounting Standards Update No. 2013-0806/07/2013
Source downloaded (UTC): 2026-09-10T01:32:09.466Z to 2026-09-10T01:32:09.466Z Record version: sha256:8ab9c8429c4afc2fc2694e55efb4556035611f5eac88ff34775bbe39aa2de952 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-946-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/810/946/#05-overview-and-background) SEC content: no ##### [810-946-05-1](https://asc.understandingaccounting.org/asc/810/946/#810-946-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:09.466Z to 2026-09-10T01:32:09.466Z Record version: sha256:0ab2bdadd14fb157b27735615fb5003d56b0e547132c4c3566b268c670decd12 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on the application of consolidation guidance in Topic 810 by an investment company. Source downloaded (UTC): 2026-09-10T01:32:13.047Z to 2026-09-10T01:32:13.047Z Record version: sha256:c17ca11ea3aacbb41f467634ca30a69a085806bf73334803cff4ff7fbdc8876d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-946-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/810/946/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [810-946-15-1](https://asc.understandingaccounting.org/asc/810/946/#810-946-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:13.047Z to 2026-09-10T01:32:13.047Z Record version: sha256:7b3d954b8ed08bec7bf315cadd1a114c8da2787ac8c024b35e083c900fdaecac 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 946-10-15. ##### [810-946-15-2](https://asc.understandingaccounting.org/asc/810/946/#810-946-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:13.047Z to 2026-09-10T01:32:13.047Z Record version: sha256:0a82a69a0e0c4f0e7f83d2c2ec7b1088db1a9988efdcefe663a1297a0fb22cac Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2013-08](https://asc.understandingaccounting.org/updates/asu-2013-08/). Source downloaded (UTC): 2026-09-10T01:32:18.622Z to 2026-09-10T01:32:18.622Z Record version: sha256:a5b29e0b4f71b3fe9f1d8e2f203833e2ca8b0e379b3fbffa6d5504fddc61dfaf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-946-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/810/946/#45-other-presentation-matters) SEC content: no ##### [810-946-45-1](https://asc.understandingaccounting.org/asc/810/946/#810-946-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:18.622Z to 2026-09-10T01:32:18.622Z Record version: sha256:1e2fc1cfba716dc53f470247a42753ece2df257ffda1f59de46052040055ce66 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2013-08](https://asc.understandingaccounting.org/updates/asu-2013-08/). #### Application of Consolidation Guidance ##### [810-946-45-2](https://asc.understandingaccounting.org/asc/810/946/#810-946-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:18.622Z to 2026-09-10T01:32:18.622Z Record version: sha256:cadf75c66adc45484ec60c1470908c813239c014c43563cd1fa2040aa04d437e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Except as discussed in the following paragraph, consolidation by an investment company of an investee that is not an investment company is not appropriate. Rather, those controlling financial interests held by an investment company shall be measured in accordance with guidance in Subtopic 946-320, which requires investments in debt and equity securities to be subsequently measured 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."). ##### [810-946-45-3](https://asc.understandingaccounting.org/asc/810/946/#810-946-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:18.622Z to 2026-09-10T01:32:18.622Z Record version: sha256:153261b8495941de82d37eab3ef91b4fe65f852632ee245da0de94f88d68af1d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An exception to the general principle in the preceding paragraph occurs if the investment company has an investment in an operating entity that provides services to the investment company, for example, an investment adviser or transfer agent (see paragraph [946-10-55-5](https://asc.understandingaccounting.org/asc/946/10/#946-10-55-5)). In those cases, the purpose of the investment is to provide services to the investment company rather than to realize a gain on the sale of the investment. If an investment company holds a controlling financial interest in such an operating entity, the investment company should consolidate that investee, rather than measuring the investment at fair value. ##### [810-946-45-4](https://asc.understandingaccounting.org/asc/810/946/#810-946-45-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:18.622Z to 2026-09-10T01:32:18.622Z Record version: sha256:566e1b13289b52f37916faaf50e3e673b0dfa802bd4838c827153bde43a3b5df Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraphs 946-810-45-4 through 45-24 superseded by Accounting Standards Update No. 2013-08](https://asc.understandingaccounting.org/asc/810/946/#810-946-45-4). Source downloaded (UTC): 2026-09-10T01:32:20.462Z to 2026-09-10T01:32:20.462Z Record version: sha256:b437f0be9fba44a400f03c607ea9be4170df77fefe498fbe4097b38602e540ef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-946-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/810/946/#50-disclosure) SEC content: no ##### [810-946-50-1](https://asc.understandingaccounting.org/asc/810/946/#810-946-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:20.462Z to 2026-09-10T01:32:20.462Z Record version: sha256:55163a4d87bcf6e1d9d236db36fc128214db93b777413fc2fd7a0f3e269044d8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraphs 946-810-50-1 through 50-4 superseded by Accounting Standards Update No. 2013-08](https://asc.understandingaccounting.org/asc/810/946/#810-946-50-1). Source downloaded (UTC): 2026-09-10T01:32:22.214Z to 2026-09-10T01:32:22.214Z Record version: sha256:e3d96b0984c2756fe1e327fa5bd89637cfcb264c99aef9b16f887bce665e7e1b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-946-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/810/946/#55-implementation-guidance-and-illustrations) SEC content: no ##### [810-946-55-1](https://asc.understandingaccounting.org/asc/810/946/#810-946-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:22.214Z to 2026-09-10T01:32:22.214Z Record version: sha256:a1d4dfc30d3ed490d3a5adff27097639991205a77db49f27642f49744f8155b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraphs 946-810-55-1 through 55-12 superseded by Accounting Standards Update No. 2013-08](https://asc.understandingaccounting.org/asc/810/946/#810-946-55-1). Source downloaded (UTC): 2026-09-10T01:32:24.826Z to 2026-09-10T01:32:24.826Z Record version: sha256:bae2ba2b8c3382cad5d653c0981b2387f2d35e932507d96f887569bd53a9eb73 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-946-65: 65 Transition and Open Effective Date Information [Read section](https://asc.understandingaccounting.org/asc/810/946/#65-transition-and-open-effective-date-information) SEC content: no ##### [810-946-65-1](https://asc.understandingaccounting.org/asc/810/946/#810-946-65-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:24.826Z to 2026-09-10T01:32:24.826Z Record version: sha256:fbe5903d11eb48cb4881a363d3ed388b495074eb5fa19d1bce8761cc7012df32 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): 2026-09-10T01:32:28.245Z to 2026-09-10T01:32:28.245Z Record version: sha256:400f2cf6f8b00c0a5980b349b26a5cd55cb827db624ba7a2baafc29c7b9e6355 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-948: Consolidation — Financial Services—Mortgage Banking Source downloaded (UTC): 2026-09-10T01:32:28.245Z to 2026-09-10T01:32:28.245Z Record version: sha256:78f1266dac4cfb379b9557b3468f7d2a03ef5967c77710235af7a36c249a4986 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-948-S40: SEC 40 Derecognition [Read section](https://asc.understandingaccounting.org/asc/810/948/#sec-40-derecognition) SEC content: yes #### Certain Transfers of Financial Assets that Do Not Fall Within the Scope of Topic 860 ##### [810-948-S40-1](https://asc.understandingaccounting.org/asc/810/948/#810-948-S40-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:28.245Z to 2026-09-10T01:32:28.245Z Record version: sha256:b19117b50480db3c08e84cae8c722c1e8b6dbefbe89580e329268c7bd15d88ba Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [942-810-S99-1](https://asc.understandingaccounting.org/asc/810/942/#810-942-S99-1), SAB Topic 5.V, for SEC Staff views on the accounting for certain transfers of financial assets that do not fall within the scope of Topic 860. Source downloaded (UTC): 2026-09-10T01:32:30.134Z to 2026-09-10T01:32:39.647Z Record version: sha256:1e222a16d5b611a7eacaf60e36135ee2b21be63186668df7ea89c062d62a33ae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-952: Consolidation — Franchisors ### Machine-generated study aids ```json { "summary": "ASC 810-952 was the franchisor-specific consolidation guidance within the Consolidation topic, addressing when a franchisor should consolidate a franchisee entity (typically under the variable interest entity model). Every paragraph in the subtopic — the overview, scope, and implementation guidance and illustrations — was superseded by Accounting Standards Update No. 2009-17. As a result, the subtopic contains no operative guidance; franchisors apply the general consolidation model in ASC 810-10.", "key_points": [ "All content of this subtopic, including 810-952-05-1 (Overview and Background), 810-952-15-1 (Scope), and 810-952-55-1 through 55-5 (Implementation Guidance and Illustrations), was superseded by ASU 2009-17.", "Because no operative paragraphs remain, there is no franchisor-specific consolidation exception or illustration to apply.", "Franchisors evaluating whether to consolidate a franchisee must instead apply the general variable interest entity and voting interest guidance in ASC 810-10.", "ASU 2009-17 replaced the prior quantitative-based primary beneficiary analysis with a qualitative assessment of power over the activities that most significantly affect an entity's economic performance and exposure to potentially significant losses or benefits.", "The subtopic remains in the Codification only as a placeholder documenting the superseded status and should not be cited as authoritative support." ], "categories": [ "Consolidation", "Industry-specific", "Transition and effective dates" ], "audience_level": "intermediate", "student_note": "Know that this subtopic is entirely superseded — the common mistake is assuming franchisors have a special consolidation rule for franchisees; after ASU 2009-17 they simply run the general ASC 810-10 VIE analysis. On an exam, the right answer is to analyze power and economics over the franchisee, not to look for franchise-specific relief.", "related_topics": [ "810-10", "952", "952-605", "460-10" ], "key_concepts": [ "franchisor", "franchisee", "variable interest entity", "primary beneficiary", "consolidation", "superseded guidance", "controlling financial interest" ] } ``` Source downloaded (UTC): 2026-09-10T01:32:30.134Z to 2026-09-10T01:32:30.134Z Record version: sha256:aa3d81ce8d60fa42d0185299364e249088bbdd371f32a27653a2e0c3f5110347 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-952-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/810/952/#00-status) SEC content: no ##### [810-952-00-1](https://asc.understandingaccounting.org/asc/810/952/#810-952-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:30.134Z to 2026-09-10T01:32:30.134Z Record version: sha256:4135cbd46d97e7ea69a2061eb5af3bb7a1d58846c069d1dc71e74fd7e52dc9ff 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
Subtopic 952-810SupersededAccounting Standards Update No. 2009-1712/23/2009
Source downloaded (UTC): 2026-09-10T01:32:32.572Z to 2026-09-10T01:32:32.572Z Record version: sha256:5b590bed9d6edc6becddf97fc0c15bdd87115637622297021a6b8a3842dd82a9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-952-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/810/952/#05-overview-and-background) SEC content: no ##### [810-952-05-1](https://asc.understandingaccounting.org/asc/810/952/#810-952-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:32.572Z to 2026-09-10T01:32:32.572Z Record version: sha256:cc2686ab588819269b59927a87100950a43d81935fe0f688011530094a705c11 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). Source downloaded (UTC): 2026-09-10T01:32:35.786Z to 2026-09-10T01:32:35.786Z Record version: sha256:3dac5c6c0f06826c519f70e2cca0678434abca8b3c2bbe18ca400765c951d7bb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-952-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/810/952/#15-scope-and-scope-exceptions) SEC content: no ##### [810-952-15-1](https://asc.understandingaccounting.org/asc/810/952/#810-952-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:35.786Z to 2026-09-10T01:32:35.786Z Record version: sha256:40a8c6ae23167cc96b6fc2d48391888b887878fc20f1b53fd1f5c5db01f2e989 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). Source downloaded (UTC): 2026-09-10T01:32:39.647Z to 2026-09-10T01:32:39.647Z Record version: sha256:de37184b14cd718a132e875f3be15926e2cfeac0fc138198e98de014a2da9e9c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-952-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/810/952/#55-implementation-guidance-and-illustrations) SEC content: no ##### [810-952-55-1](https://asc.understandingaccounting.org/asc/810/952/#810-952-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:39.647Z to 2026-09-10T01:32:39.647Z Record version: sha256:b4a3e3257af298c05563d60347e9f62a9c351db0f3c8ea5481c18dce3c3b32e5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). ##### [810-952-55-2](https://asc.understandingaccounting.org/asc/810/952/#810-952-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:39.647Z to 2026-09-10T01:32:39.647Z Record version: sha256:4f4c652c9c3567cf090c01af9ec45e57f8bbdd235a8d8044859fb9e0377e703f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). ##### [810-952-55-3](https://asc.understandingaccounting.org/asc/810/952/#810-952-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:39.647Z to 2026-09-10T01:32:39.647Z Record version: sha256:2ef5ad6d08341015aaaf95c4f4dd0a9dd7133db68127d7669a77e40500b349e4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). ##### [810-952-55-4](https://asc.understandingaccounting.org/asc/810/952/#810-952-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:39.647Z to 2026-09-10T01:32:39.647Z Record version: sha256:816791ec4102ead0dcc9447f7a7307e3c4aea8c56ffebecda2a7e2aed06dac21 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). ##### [810-952-55-5](https://asc.understandingaccounting.org/asc/810/952/#810-952-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:39.647Z to 2026-09-10T01:32:39.647Z Record version: sha256:123fc93c701967ceb35ca569b1d9253efe2b367bb18c00de7ee07f59225c05b5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-17](https://asc.understandingaccounting.org/updates/asu-2009-17/). Source downloaded (UTC): 2026-09-10T01:32:41.551Z to 2026-09-10T01:33:00.907Z Record version: sha256:ab91ed5fd77f2d7aa554fb0e80e8b7c3f6787a4a3ba7987f1928c0b6832d81b3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-954: Consolidation — Health Care Entities ### Machine-generated study aids ```json { "summary": "This Subtopic routes health care entities to the right consolidation model depending on whether the reporting entity is investor-owned or a not-for-profit, business-oriented health care entity. Investor-owned providers apply the VIE Subsections first, then the General Subsections and the Consolidation of Entities Controlled by Contract Subsections of 810-10; NFP health care entities are exempt from the VIE model (unless used to circumvent it) and instead apply 810-10 General/controlled-by-contract guidance for for-profit investees and Subtopic 958-810 for relationships with other NFPs. It also treats sole corporate membership in an NFP as a controlling financial interest and requires malpractice trust funds to be included in the entity's financial statements.", "key_points": [ "An investor-owned health care entity must first test whether an entity it holds an interest in is a VIE under 810-10-15-14 and apply the VIE Subsections; if not a VIE, it applies only the General Subsections of 810-10 to assess a controlling financial interest (810-954-15-2(a)-(b)).", "Contractual management relationships (for example, with a physician practice) are evaluated under the Consolidation of Entities Controlled by Contract Subsections of Subtopic 810-10 (810-954-15-2(c), 810-954-15-3(c), 810-954-60-1).", "Not-for-profit, business-oriented health care entities are not subject to the VIE Subsections unless the NFP is used by a business entity in a manner similar to a VIE to circumvent those provisions, though the NFP may be a related party under 810-10-25-42 through 25-44 (810-954-15-3(a); 810-954-45-2).", "An NFP health care entity's relationships with other NFPs involving control, an economic interest, or both are evaluated under Subtopic 958-810; general or limited partner interests in for-profit limited partnerships (or functionally equivalent LLCs) follow 958-810-25-11 through 25-29 (810-954-15-3(dd), (f)).", "Sole corporate membership in a not-for-profit entity, like ownership of a majority voting interest in a for-profit entity, is a controlling financial interest unless control does not rest with the sole corporate member (e.g., bankruptcy or severe legal or contractual limitations) (810-954-45-3A); supermajority board voting requirements may overcome the presumption of control (810-954-45-2).", "A noncontrolling interest is provided only if represented by an economic interest that shares in operating results or the residual interest upon dissolution (810-954-45-3B), and an entity required to be consolidated cannot instead be reported at fair value under 958-325-35-6 (810-954-45-3C).", "A malpractice trust fund, whether legally revocable or irrevocable, generally is included in the health care entity's financial statements—split between current and noncurrent assets, with its revenues and administrative expenses in the statement of operations—and its existence and revocability must be disclosed (810-954-45-4; 810-954-50-1)." ], "categories": [ "Consolidation", "Industry-specific", "Not-for-profit", "Presentation" ], "audience_level": "advanced", "student_note": "Exam traps here are (1) forgetting that NFP business-oriented health care entities are scoped out of the VIE model and instead use 958-810, and (2) assuming sole corporate membership is not \"ownership\"—it is treated as a controlling financial interest. Also remember a noncontrolling interest is presented only when the holder actually shares in operating results or residual net assets.", "related_topics": [ "958-810", "810-10", "954-810", "810-30", "970-323", "323-10" ], "key_concepts": [ "controlling financial interest", "sole corporate membership", "variable interest entity scope exception", "entities controlled by contract", "physician practice management", "noncontrolling interest", "economic interest", "malpractice trust fund" ] } ``` Source downloaded (UTC): 2026-09-10T01:32:41.551Z to 2026-09-10T01:32:41.551Z Record version: sha256:ebd74e31daaedf0b7ded3d8f98f615afb793d1901ad836972a9cdd6b94c4442b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-954-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/810/954/#00-status) SEC content: no ##### [810-954-00-1](https://asc.understandingaccounting.org/asc/810/954/#810-954-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:41.551Z to 2026-09-10T01:32:41.551Z Record version: sha256:59e4b1e2f675834b4d99cd1b1412ac5164305586c625dfb9bc8934d2096c9c7b 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
Economic InterestAmendedAccounting Standards Update No. 2016-1408/18/2016
Legal EntityAddedAccounting Standards Update No. 2017-0201/12/2017
954-810-15-2AmendedAccounting Standards Update No. 2015-0202/18/2015
954-810-15-3AmendedAccounting Standards Update No. 2025-1212/17/2025
954-810-15-3AmendedAccounting Standards Update No. 2017-0201/12/2017
954-810-15-3AmendedAccounting Standards Update No. 2015-0202/18/2015
954-810-45-3BAmendedAccounting Standards Update No. 2016-1912/14/2016
954-810-45-3BAmendedAccounting Standards Update No. 2010-0802/02/2010
954-810-50-2AddedAccounting Standards Update No. 2010-0701/28/2010
Source downloaded (UTC): 2026-09-10T01:32:44.347Z to 2026-09-10T01:32:44.347Z Record version: sha256:d2689c5bc56d87fa93eaf823ede03c98f3e3ade8d121c216acf22ac84e080c78 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-954-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/810/954/#05-overview-and-background) SEC content: no ##### [810-954-05-1](https://asc.understandingaccounting.org/asc/810/954/#810-954-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:44.347Z to 2026-09-10T01:32:44.347Z Record version: sha256:f361b4234fe3b26d4a38f9865a291706fc5fae4c3186e958d7e2a6851d8076b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses consolidation accounting for health care entities within the scope of this Topic. ##### [810-954-05-2](https://asc.understandingaccounting.org/asc/810/954/#810-954-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:44.347Z to 2026-09-10T01:32:44.347Z Record version: sha256:6ac953e25104f74c29b818d3a0733acd2e8786c0a1b3587ff2f888be022f5522 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An integrated health care system typically consists of multiple related entities, operating both for-profit entities and not-for-profit entities (NFPs). A not-for-profit parent entity may be the sole corporate member or, through other means, it may control other entities such as a not-for-profit hospital, a not-for-profit medical foundation that contracts with a for-profit physician group, or other not-for-profit providers such as a long-term care center, a substance abuse center, a surgery center, or an outpatient clinic. The system also may own stock in various for-profit ventures such as [health maintenance organizations](https://asc.understandingaccounting.org/glossary/h/#health-maintenance-organization "A generic group of medical care entities organized to provide defined health care services to members in return for fixed, periodic premiums (usually paid monthly) that are paid in advance.") or insurance entities that may or may not provide patient care. Fundraising typically is accomplished through a separate foundation. Foundations, auxiliaries, guilds, and similar entities frequently assist and, in many instances, are related to the health care entity. ##### [810-954-05-3](https://asc.understandingaccounting.org/asc/810/954/#810-954-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:44.347Z to 2026-09-10T01:32:44.347Z Record version: sha256:ec0a5075366c154f3a34669fb5ef2a7f959dc233192e917210ea1d3628355dde Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The rights and powers of the controlling entity may vary depending on the legal structure of the controlled entity and the nature of [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."). The majority owner of a for-profit entity's voting stock or the sole corporate member of an NFP may not only have the ability to determine the direction of the controlled entity but also have the proportionate right to (or the responsibility for) operating results and a residual interest in the net assets upon dissolution. However, in other situations, the rights of the controlling party may be more limited. For example, in the case of a sole general partner in a limited partnership, the limited partners—and not the general partner—may be entitled to the net assets upon dissolution. Source downloaded (UTC): 2026-09-10T01:32:47.021Z to 2026-09-10T01:32:47.021Z Record version: sha256:6aa470c039d20059ff0a2387e3e3c9b44318d094651b08e61cf408d6240c70f0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-954-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/810/954/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [810-954-15-1](https://asc.understandingaccounting.org/asc/810/954/#810-954-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:47.021Z to 2026-09-10T01:32:47.021Z Record version: sha256:80dd1a239101b662131a47a307fba0c0b611f38d11262e3f1d9dd1b5868854e1 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 954-10-15. #### Entities ##### [810-954-15-2](https://asc.understandingaccounting.org/asc/810/954/#810-954-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:47.021Z to 2026-09-10T01:32:47.021Z Record version: sha256:f83ca826991034eb4f00566514ef78f7d5f2505833d4d2f7583596836a7d6f01 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the reporting entity is an investor-owned health care entity, this Subtopic provides consolidation guidance for reporting relationships with other entities in addition to the guidance in the following locations: 1. a Pursuant to paragraph [810-10-15-3(a)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-3), if an investor-owned health care entity has an interest in an entity, it must determine whether that entity is within the scope of the Variable Interest Entities Subsections of Subtopic 810-10 pursuant to paragraph [810-10-15-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14). If that entity is within the scope of the Variable Interest Entities Subsections, the investor-owned health care entity shall first apply the guidance in those Subsections. Paragraph [810-10-15-17](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17) provides specific exceptions to applying the Variable Interest Entities Subsections. 2. b Pursuant to paragraph [810-10-15-3(b)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-3), if the investor-owned health care entity has an interest in an entity that is not within the scope of the Variable Interest Entities Subsections of Subtopic 810-10 and is not within the scope of the Subsections mentioned in paragraph [810-10-15-3(c)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-3), it shall use only the guidance in the General Subsections of Subtopic 810-10 to determine whether that interest constitutes a controlling financial interest. 3. c Pursuant to paragraph [810-10-15-3(c)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-3), if the investor-owned health care entity has a contractual management relationship with another entity (for example, a physician practice) and that other entity is not within the scope of the Variable Interest Entities Subsections of Subtopic 810-10, it shall use the guidance in the Consolidation of Entities Controlled by Contract Subsections of Subtopic 810-10 to determine whether the arrangement constitutes a controlling financial interest. 4. d [Subparagraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). 5. e Pursuant to Section 810-30-15, if the investor-owned health care entity is a sponsor in a research and development arrangement, it shall apply the guidance in Subtopic 810-30. ##### [810-954-15-3](https://asc.understandingaccounting.org/asc/810/954/#810-954-15-3) Pending content: yes Source downloaded (UTC): 2026-09-10T01:32:47.021Z to 2026-09-10T01:32:47.021Z Record version: sha256:82ac7da2241853dd2163165debe8a0c531ee026995013af1e12b32abaf8c8030 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the reporting entity is a not-for-profit business-oriented health care entity, this Subtopic provides consolidation guidance for reporting relationships with other entities in addition to the guidance in the following locations: 1. a Pursuant to paragraph [810-10-15-17](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17), not-for-profit business-oriented health care entities are not subject to the Variable Interest Entities Subsections of Subtopic 810-10 unless the not-for-profit entity is used by a business entity in a manner similar to a VIE in an effort to circumvent the provisions of those Subsections. 2. b If the not-for-profit, business-oriented health care entity has an investment in a for-profit entity, it shall use the guidance in the General Subsections of Subtopic 810-10 to determine whether that interest constitutes a controlling financial interest. 3. c If the not-for-profit, business-oriented health care entity has a contractual management relationship with another entity (for example, a physician practice), it shall use the guidance in the Consolidation of Entities Controlled by Contract Subsections of Subtopic 810-10 to determine whether the arrangement constitutes a controlling financial interest. 4. d [Subparagraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). 5. dd If the not-for-profit, business-oriented health care entity is the general partner or limited partner of a for-profit limited partnership 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.") (such as a limited liability company that has governing provisions that are the functional equivalent of a limited partnership), it 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) . 6. e If the not-for-profit, business-oriented health care entity is a sponsor in a research and development arrangement, it shall apply the guidance in Subtopic 810-30. 7. f If the not-for-profit, business-oriented health care entity has a relationship with another not-for-profit entity that involves [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."), 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."), or both, it shall apply the guidance in Subtopic 958-810. 8. g If the not-for-profit, business-oriented health care entity is engaged in leasing transactions with a special-purpose-entity (SPE) lessor, it shall consider whether it should consolidate the lessor in accordance with the guidance in paragraphs [958-810-25-8 through 25-10](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-8) . 9. h Except where it elects to report such interests at fair value in accordance with the Fair Value Option Subsections of Subtopic 825-10, a not-for-profit, business-oriented health care entity that owns 50 percent or less of the common voting stock of an investee and can exercise significant influence over operating and financial policies shall apply the guidance in Subtopic 323-10. 10. i Except where it elects to report such interests at fair value in accordance with the Fair Value Option Subsections of Subtopic 825-10, a not-for-profit, business-oriented health care entity shall report noncontrolling interests in for-profit real estate partnerships, limited liability entities, and similar entities over which the reporting entity has more than a minor interest under the equity method in accordance with the guidance in Subtopic 970-323. A not-for-profit, business-oriented health care entity shall apply the guidance in paragraph [970-323-25-2](https://asc.understandingaccounting.org/asc/323/970/#323-970-25-2) to determine whether its interest in a for-profit partnership, limited liability entity, or similar entity is a controlling interest or a noncontrolling interest. A not-for-profit, business-oriented health care entity 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 entity should be viewed as similar to a partnership, as opposed to a corporation, for purposes of determining whether a noncontrolling interest in a limited liability entity or a similar entity should be accounted for in accordance with Subtopic 970-323 or Subtopic 323-10. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [105-10-65-10](https://asc.understandingaccounting.org/asc/105/10/#105-10-65-10)If the reporting entity is a not-for-profit business-oriented health care entity, this Subtopic provides consolidation guidance for reporting relationships with other entities in addition to the guidance in the following locations: 1. a Pursuant to paragraph [810-10-15-17](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17), not-for-profit business-oriented health care entities are not subject to the Variable Interest Entities Subsections of Subtopic 810-10 unless the not-for-profit entity is used by a business entity in a manner similar to a VIE in an effort to circumvent the provisions of those Subsections. 2. b If the not-for-profit, business-oriented health care entity has an investment in a for-profit entity (other than a limited partnership 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.") \[such as a limited liability company that has governing provisions that are the functional equivalent of a limited partnership\]), it shall use the guidance in the General Subsections of Subtopic 810-10 to determine whether that interest constitutes a controlling financial interest. 3. c If the not-for-profit, business-oriented health care entity has a contractual management relationship with another entity (for example, a physician practice), it shall use the guidance in the Consolidation of Entities Controlled by Contract Subsections of Subtopic 810-10 to determine whether the arrangement constitutes a controlling financial interest. 4. d [Subparagraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). 5. dd If the not-for-profit, business-oriented health care entity is the general partner or limited partner of a for-profit limited partnership or similar legal entity (such as a limited liability company that has governing provisions that are the functional equivalent of a limited partnership), it 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) . 6. e If the not-for-profit, business-oriented health care entity is a sponsor in a research and development arrangement, it shall apply the guidance in Subtopic 810-30. 7. f If the not-for-profit, business-oriented health care entity has a relationship with another not-for-profit entity that involves [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."), 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."), or both, it shall apply the guidance in Subtopic 958-810. 8. g If the not-for-profit, business-oriented health care entity is engaged in leasing transactions with a special-purpose-entity (SPE) lessor, it shall consider whether it should consolidate the lessor in accordance with the guidance in paragraphs [958-810-25-8 through 25-10](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-8) . 9. h Except where it elects to report such interests at fair value in accordance with the Fair Value Option Subsections of Subtopic 825-10, a not-for-profit, business-oriented health care entity that owns 50 percent or less of the common voting stock of an investee and can exercise significant influence over operating and financial policies shall apply the guidance in Subtopic 323-10. 10. i Except where it elects to report such interests at fair value in accordance with the Fair Value Option Subsections of Subtopic 825-10, a not-for-profit, business-oriented health care entity shall report noncontrolling interests in for-profit real estate partnerships, limited liability entities, and similar entities over which the reporting entity has more than a minor interest under the equity method in accordance with the guidance in Subtopic 970-323. A not-for-profit, business-oriented health care entity shall apply the guidance in paragraph [970-323-25-2](https://asc.understandingaccounting.org/asc/323/970/#323-970-25-2) to determine whether its interest in a for-profit partnership, limited liability entity, or similar entity is a controlling interest or a noncontrolling interest. A not-for-profit, business-oriented health care entity 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 entity should be viewed as similar to a partnership, as opposed to a corporation, for purposes of determining whether a noncontrolling interest in a limited liability entity or a similar entity should be accounted for in accordance with Subtopic 970-323 or Subtopic 323-10. Source downloaded (UTC): 2026-09-10T01:32:52.542Z to 2026-09-10T01:32:52.542Z Record version: sha256:a1a3a0768b37dd50753e8e182c400120031d9ceaa6dabc5872664d91e43646c4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-954-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/810/954/#45-other-presentation-matters) SEC content: no ##### [810-954-45-1](https://asc.understandingaccounting.org/asc/810/954/#810-954-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:52.542Z to 2026-09-10T01:32:52.542Z Record version: sha256:c5e2fca02ccd4d61659b686f1de7250442ebe89a8ddcd91ba4a9df07b9d8d52d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Whether the financial statements of a reporting health care entity and those of one or more other for-profit entities or not-for-profit entities (NFPs) shall be consolidated, whether those other entities shall be reported using the equity method, and the extent of disclosure that is be required (if any) if consolidated financial statements are not presented, shall be based on the nature of the relationship between the entities. See paragraphs [954-810-15-2 through 15-3](https://asc.understandingaccounting.org/asc/810/954/#810-954-15-2) . ##### [810-954-45-2](https://asc.understandingaccounting.org/asc/810/954/#810-954-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:52.542Z to 2026-09-10T01:32:52.542Z Record version: sha256:3ccaa0711c13e20ee90135faef28b4464cfbc0a2b8e688a819bc13daa67681a0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [958-810-25-2A](https://asc.understandingaccounting.org/asc/810/958/#810-958-25-2A) explains that, in some situations, 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. (For related implementation guidance, see paragraph [958-810-55-4A](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-4A).) Pursuant to paragraph [810-10-15-17(a)](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-17) a not-for-profit, business-oriented health care entity is not subject to the Variable Interest Entities Subsections of Subtopic 810-10, except that it may be a related party for purposes of applying paragraphs [810-10-25-42 through 25-44](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-42) . Also, if a not-for-profit, business-oriented health care entity is used by business entities in a manner similar to a variable interest entity (VIE) in an effort to circumvent the provisions of the Variable Interest Entities Subsections of Subtopic 810-10, that not-for-profit entity shall be subject to the Variable Interest Entities Subsections of that Subtopic. ##### [810-954-45-3](https://asc.understandingaccounting.org/asc/810/954/#810-954-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:52.542Z to 2026-09-10T01:32:52.542Z Record version: sha256:f368cca33ae05efc10f70a5f12dff114eb7344f7c8e86a20a04e0ba3d6e636bf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [810-954-45-3A](https://asc.understandingaccounting.org/asc/810/954/#810-954-45-3A) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:52.542Z to 2026-09-10T01:32:52.542Z Record version: sha256:d4c9a4c6feab7f5aba98fdac21fe40314ba796c1229a79fd5642864246e2cd89 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A parent corporation typically owns stock in a for-profit entity, whereas a sole corporate member holds membership rights in a not-for-profit entity. Sole corporate membership in a not-for-profit entity, 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). ##### [810-954-45-3B](https://asc.understandingaccounting.org/asc/810/954/#810-954-45-3B) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:52.542Z to 2026-09-10T01:32:52.542Z Record version: sha256:fc80a1e929e21719dc21834ba3ebbb56dbb4dd4ab88e69290e516f8388135f6a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When consolidated financial statements are required or permitted by Section 958-810-25, a noncontrolling interest shall be provided if such interest is represented by an economic interest whereby the noncontrolling interest would share in the operating results or residual interest upon dissolution. (See presentation and disclosure requirements in Sections 958-810-45 and 958-810-50, respectively.) ##### [810-954-45-3C](https://asc.understandingaccounting.org/asc/810/954/#810-954-45-3C) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:52.542Z to 2026-09-10T01:32:52.542Z Record version: sha256:7c7c898e3f3f75eef6c8c4ef7b79ea02b167b004da92c936f277b36c3693c483 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Not-for-profit, business-oriented health care entities shall not report an investment in an entity at fair value, as described in paragraph [958-325-35-6](https://asc.understandingaccounting.org/asc/325/958/#325-958-35-6), if that entity is required to be consolidated. #### Medical Malpractice Claims ##### [810-954-45-4](https://asc.understandingaccounting.org/asc/810/954/#810-954-45-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:52.542Z to 2026-09-10T01:32:52.542Z Record version: sha256:33f2c6d13868426d942d7cbe51eb6d6843444f4d8c898838bacccc60c25bca26 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In general, a trust fund, whether legally revocable or irrevocable, shall be included in the financial statements of the health care entity. A portion of the fund equal to the amount of assets expected to be liquidated to pay malpractice claims classified as current liabilities shall be classified as a current asset; the balance of the fund, if any, shall be classified as a noncurrent asset. Revenues and administrative expenses of the trust fund are included in the statement of operations. In some circumstances, the foregoing may not be possible (for example, if a common trust fund exists for a group of health care entities; if the health care entity is part of a common municipality risk-financing internal service fund; or if the legal, regulatory, or indenture restrictions prevent the inclusion of a trust fund in a health care entity's financial statements). Source downloaded (UTC): 2026-09-10T01:32:54.976Z to 2026-09-10T01:32:54.976Z Record version: sha256:7226185c2b70e236bc29a83046ba73488d597cc56f5b6d2c5c05be344ee0fee8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-954-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/810/954/#50-disclosure) SEC content: no #### Medical Malpractice Trust Fund ##### [810-954-50-1](https://asc.understandingaccounting.org/asc/810/954/#810-954-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:54.976Z to 2026-09-10T01:32:54.976Z Record version: sha256:632548f70ad6dab08331a0f5a06af21512049335a033cdf9e566b81a3ef2a609 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The existence of the trust fund and whether it is irrevocable shall be disclosed in the financial statements. #### Noncontrolling Interests ##### [810-954-50-2](https://asc.understandingaccounting.org/asc/810/954/#810-954-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:54.976Z to 2026-09-10T01:32:54.976Z Record version: sha256:790a46c567db0df91c64f3d91b2155b52be275b75f81523ca9dd910830dee592 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A not-for-profit, business-oriented health care entity shall include the performance indicator in the schedule required by paragraphs [958-810-50-4 through 50-5](https://asc.understandingaccounting.org/asc/810/958/#810-958-50-4) . Paragraph [958-810-55-25](https://asc.understandingaccounting.org/asc/810/958/#810-958-55-25) illustrates the required disclosure using a reconciling schedule in notes to the consolidated financial statements. Source downloaded (UTC): 2026-09-10T01:32:56.860Z to 2026-09-10T01:32:56.860Z Record version: sha256:091160cedf5931a3ecc8532dbec56706394804fd5d31610a3d3f550e0488b3b0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-954-60: 60 Relationships [Read section](https://asc.understandingaccounting.org/asc/810/954/#60-relationships) SEC content: no #### Consolidations ##### [810-954-60-1](https://asc.understandingaccounting.org/asc/810/954/#810-954-60-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:32:56.860Z to 2026-09-10T01:32:56.860Z Record version: sha256:f00d0f33484a4856ebafa05bf4a95677a60c7e91295ffec29da0c34459c3da57 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For contractual arrangements between entities that are in business to practice and dispense medicine (physician practices) and entities that are in business to manage the operations of those physician practices (physician practice management entities), see the Consolidation of Entities Controlled by Contract Subsections of Subtopic 810-10. 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_. Source downloaded (UTC): 2026-09-10T01:33:31.428Z to 2026-09-10T01:33:47.563Z Record version: sha256:eb964242177a3dff28e7ccb5ace5f538dce1b9cf8d30f6a78447388779ec3696 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-970: Consolidation — Real Estate—General ### Machine-generated study aids ```json { "summary": "ASC 810-970 gives real-estate-specific consolidation guidance layered on top of ASC 810-10. It explains when an investor controls a general or limited partnership that holds real estate (majority voting interest, or majority of profit/loss interests when voting interests are unclear), when substantive participating rights of other partners overcome the presumption of control, and when a noncontrolling investor instead uses the equity method. It also sets the five conditions that permit proportionate (undivided interest) presentation of an investment in real property.", "key_points": [ "A general partnership controlled directly or indirectly by an investor is in substance a subsidiary; ownership of over 50 percent of voting shares points toward consolidation, and if partnership voting interests are not clearly indicated, ownership of a majority of the financial interests in profits or losses usually indicates control (810-970-25-1).", "Control may exist with less than a majority ownership by contract, lease, agreement with other stockholders or partners, or court decree (810-970-25-1).", "The presumption of control by the majority interest holder is overcome if other partners hold substantive participating rights over significant financial and operating decisions made in the ordinary course of business, evaluated under 810-10-25-2 through 25-14 (810-970-25-2).", "A controlling investor accounts for the investment under the principles applicable to investments in subsidiaries and eliminates interentity profits and losses on assets remaining within the group; a noncontrolling investor in a general partnership uses the equity method under Topic 323 (810-970-25-2).", "For a limited partnership that is not a VIE under 810-10-15-14, limited partners assess a controlling financial interest under 810-10-15-8A: if no single partner controls, general and limited partners apply the equity method (except an interest so minor that the limited partner has virtually no influence, see 323-30-S99-1); if a single limited partner controls, that partner consolidates (810-970-25-3).", "Proportionate (undivided interest) presentation of assets, liabilities, revenue, and expenses is permitted only if the property is owned by undivided interests, approval of two or more owners is not required for financing/development/sale/operating decisions, each investor is entitled to only its pro rata share of income, pays only its pro rata share of expenses, and is severally liable only for debt it incurs (810-970-45-1)." ], "categories": [ "Consolidation", "Presentation", "Industry-specific", "Recognition" ], "audience_level": "intermediate", "student_note": "Real estate ventures are the classic setting for partnership consolidation questions: a majority profits interest can signal control when voting interests are unclear, but substantive participating rights held by other partners defeat consolidation. A common misunderstanding is assuming proportionate (undivided interest) presentation is generally available for joint ventures—it is allowed only when all five conditions in 810-970-45-1, including several (not joint) liability, are met.", "related_topics": [ "810-10", "323-30", "970-323", "970-10", "323-10" ], "key_concepts": [ "controlling financial interest", "general partnership control", "limited partnership consolidation", "substantive participating rights", "equity method", "undivided interest presentation", "variable interest entity", "interentity profit elimination" ] } ``` Source downloaded (UTC): 2026-09-10T01:33:31.428Z to 2026-09-10T01:33:31.428Z Record version: sha256:3191e934360acd7b9e763de3ddedd06a0bb5070245b4b95f23250e716996fe9d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-970-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/810/970/#00-status) SEC content: no ##### [810-970-00-1](https://asc.understandingaccounting.org/asc/810/970/#810-970-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:31.428Z to 2026-09-10T01:33:31.428Z Record version: sha256:f6090c06cc67e90384dd0edf58e3610051396ffcdf97a991f353b022a081a285 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
Ordinary Course of BusinessAddedAccounting Standards Update No. 2015-0202/18/2015
970-810-25-2AmendedAccounting Standards Update No. 2015-0202/18/2015
970-810-25-3AmendedAccounting Standards Update No. 2015-0202/18/2015
Source downloaded (UTC): 2026-09-10T01:33:35.268Z to 2026-09-10T01:33:35.268Z Record version: sha256:66059271cca940673eca197a8f551a5b7d5ca12159a20fcdd2cdfed44be963df Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-970-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/810/970/#05-overview-and-background) SEC content: no ##### [810-970-05-1](https://asc.understandingaccounting.org/asc/810/970/#810-970-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:35.268Z to 2026-09-10T01:33:35.268Z Record version: sha256:8d547294a8b403e16ba982fdebb3490b81d45b84230be75f877ef22f4d96d70e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on consolidation matters incremental to the real estate industry. Source downloaded (UTC): 2026-09-10T01:33:38.563Z to 2026-09-10T01:33:38.563Z Record version: sha256:e5de1c6fe834300624e23a56a0d48980cbfcf4bb386c035c1c6193827a37e63b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-970-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/810/970/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [810-970-15-1](https://asc.understandingaccounting.org/asc/810/970/#810-970-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:38.563Z to 2026-09-10T01:33:38.563Z Record version: sha256:50ed8489da93c6fac56c3dad7d1e2d748a90addaf9bbaa32d7613502d43ae8c3 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 970-10-15. Source downloaded (UTC): 2026-09-10T01:33:44.267Z to 2026-09-10T01:33:44.267Z Record version: sha256:f6080f466e692644dc6fd708f6a0dc0c5b940b5535e0ebd111e5c66e696dffac Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-970-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/810/970/#25-recognition) SEC content: no #### General Partnerships ##### [810-970-25-1](https://asc.understandingaccounting.org/asc/810/970/#810-970-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:44.267Z to 2026-09-10T01:33:44.267Z Record version: sha256:4d3933d550c767865c46a146e36b8c67cd14114d7d485c529974d4ec0d4b61ff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [general partnership](https://asc.understandingaccounting.org/glossary/g/#general-partnership "An association in which each partner has unlimited liability.") that is controlled, directly or indirectly, by an investor is, in substance, a subsidiary of the investor. Paragraph [810-10-15-8](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-8) states that the usual condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general rule ownership by one entity, directly or indirectly, of over 50 percent of the outstanding voting shares of another entity is a condition pointing toward consolidation. However, if partnership voting interests are not clearly indicated, a condition that would usually indicate control is ownership of a majority (over 50 percent) of the financial interests in profits or losses (see paragraphs [970-323-35-16 through 35-17](https://asc.understandingaccounting.org/asc/323/970/#323-970-35-16) ). Paragraph [810-10-15-8](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-8) states that the power to control may also exist with a lesser percentage of ownership, for example, by contract, lease, agreement with other stockholders, or by court decree. The power to control may also exist with a lesser percentage of ownership by agreement with other partners. ##### [810-970-25-2](https://asc.understandingaccounting.org/asc/810/970/#810-970-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:44.267Z to 2026-09-10T01:33:44.267Z Record version: sha256:32d3a18143374824514cb9ba4e88e8d1c3f09b0948a1ee41a7dd2a01a3be879f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On the other hand, the majority interest holder may not control the entity if one or more of the other partners have substantive participating rights that permit those other partners to effectively participate in certain significant financial and operating decisions that are 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."). The determination of whether the rights of the other partners are substantive participating rights shall be evaluated in accordance with the guidance for substantive participating rights in paragraphs [810-10-25-2 through 25-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-25-2) . If the other partners have substantive participating rights, the presumption of control by the majority interest holder is overcome. A controlling investor shall account for its investment under the principles of accounting applicable to investments in subsidiaries. Accordingly, interentity profits and losses on assets remaining within the group shall be eliminated. A noncontrolling investor in a general partnership shall account for its investment by the equity method and should be guided by the provisions of Topic 323. #### Limited Partnerships ##### [810-970-25-3](https://asc.understandingaccounting.org/asc/810/970/#810-970-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:44.267Z to 2026-09-10T01:33:44.267Z Record version: sha256:0efa6eeac27eda8262479d4c3bfe68e7144c9d95297cac7770600770157364eb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If 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.") does not meet the conditions in paragraph [810-10-15-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-14) and, therefore, is not a variable interest entity, limited partners shall evaluate whether they have a controlling financial interest according to paragraph [810-10-15-8A](https://asc.understandingaccounting.org/asc/810/10/#810-10-15-8A). The guidance in Subtopic 810-10 on consolidation shall be used to determine whether any limited partners control the limited partnership: 1. a If no single partner controls the limited partnership, the general and limited partners shall apply the equity method of accounting to their interests, except for instances when a limited partner's interest is so minor that the limited partner may have virtually no influence over partnership operations and financial policies (see paragraph [323-30-S99-1](https://asc.understandingaccounting.org/asc/323/30/#323-30-S99-1)). 2. b [Subparagraph superseded by Accounting Standards Update No. 2015-02](https://asc.understandingaccounting.org/updates/asu-2015-02/). 3. c If a single limited partner controls the limited partnership, that limited partner shall consolidate the limited partnership and apply the principles of accounting applicable for investments in subsidiaries in Topic 810. Source downloaded (UTC): 2026-09-10T01:33:47.563Z to 2026-09-10T01:33:47.563Z Record version: sha256:381775a782927721b38c3a66383e818f9d42386824c26dcc5c8f41a62d7e231b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-970-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/810/970/#45-other-presentation-matters) SEC content: no #### Undivided Interests ##### [810-970-45-1](https://asc.understandingaccounting.org/asc/810/970/#810-970-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:47.563Z to 2026-09-10T01:33:47.563Z Record version: sha256:3c220370f739bed5e0a96e3b4e56d5e4de35caef03f96e439a957fe77b6dff4d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An investment in real property may be presented by recording the undivided interest in the assets, liabilities, revenue, and expenses of the venture if all of the following conditions are met: 1. a The real property is owned by [undivided interests](https://asc.understandingaccounting.org/glossary/u/#undivided-interest "An ownership arrangement in which two or more parties jointly own property, and title is held individually to the extent of each party's interest."). 2. b The approval of two or more of the owners is not required for decisions regarding the financing, development, sale, or operations of real estate owned. 3. c Each investor is entitled to only its pro rata share of income. 4. d Each investor is responsible to pay only its pro rata share of expenses. 5. e Each investor is severally liable only for indebtedness it incurs in connection with its interest in the property. Source downloaded (UTC): 2026-09-10T01:33:51.197Z to 2026-09-10T01:34:06.992Z Record version: sha256:e2e6762c0759a0c23ba551d373405d93d3042f9c6f9ee9779efa77939fdff30f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-974: Consolidation — Real Estate—Real Estate Investment Trusts ### Machine-generated study aids ```json { "summary": "This narrow Subtopic deals with measurement issues for noncontrolling interests in certain real estate investment trusts (REITs). It contains almost no substantive guidance of its own: its scope simply mirrors Section 974-10-15, and its initial and subsequent measurement sections are essentially unused, with a single cross-reference pointing to Section 974-323-25 for how a REIT accounts for an investment in a service corporation.", "key_points": [ "The Subtopic's stated purpose is to address measurement issues concerning the treatment of noncontrolling interest in certain REITs (810-974-05-1).", "Scope and scope exceptions are the same as the Overall Real Estate—REIT Subtopic, Section 974-10-15 (810-974-15-1).", "Accounting by a REIT for its investment in a service corporation is not addressed here; see Section 974-323-25 (810-974-30-6).", "All other initial measurement paragraphs (810-974-30-1 through 30-5) and all subsequent measurement paragraphs (810-974-35-1 through 35-5) are marked 'Paragraph not used,' so general Topic 810 consolidation guidance governs." ], "categories": [ "Consolidation", "Industry-specific", "Subsequent measurement", "Initial measurement" ], "audience_level": "advanced", "student_note": "Practically, this is a signpost Subtopic: don't expect REIT-specific consolidation rules here—apply ASC 810-10 (including the noncontrolling interest and VIE guidance) and follow the cross-reference to 974-323 for service corporation investments. The common misunderstanding is assuming REITs get special consolidation measurement treatment because an industry Subtopic exists.", "related_topics": [ "810-10", "974-10", "974-323", "323-10", "970" ], "key_concepts": [ "noncontrolling interest", "real estate investment trust", "consolidation", "service corporation", "measurement", "industry-specific guidance" ] } ``` Source downloaded (UTC): 2026-09-10T01:33:51.197Z to 2026-09-10T01:33:51.197Z Record version: sha256:74fb1d18c4637377ae957ef7beaca7ea41fb4c838693b445aad23b7db177f4c2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-974-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/810/974/#00-status) SEC content: no ##### [810-974-00-1](https://asc.understandingaccounting.org/asc/810/974/#810-974-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:51.197Z to 2026-09-10T01:33:51.197Z Record version: sha256:16fcc203257b1d643419d939f2e52e5c454d1d8d7dad111c092d3f2977aee915 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. No updates have been made to this Subtopic. Source downloaded (UTC): 2026-09-10T01:33:55.175Z to 2026-09-10T01:33:55.175Z Record version: sha256:e87832c0ab8c1cc8b9075500e0c35eed487ad515314cd74237852ebe80fecb54 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-974-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/810/974/#05-overview-and-background) SEC content: no ##### [810-974-05-1](https://asc.understandingaccounting.org/asc/810/974/#810-974-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:55.175Z to 2026-09-10T01:33:55.175Z Record version: sha256:4f3fec67c872c104b7e3181fbc773920cb07acf6f63958eac444d3c35d8065fd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses measurement issues concerning the treatment of [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.") in certain [real estate investment trusts](https://asc.understandingaccounting.org/glossary/r/#real-estate-investment-trust "Real estate investment trusts generally are formed as trusts, associations, or corporations. They employ equity capital, coupled with substantial amounts of debt financing, in making real estate loans and investments. Real estate investment trusts must distribute substantially all of their taxable income to their shareholders annually in order to retain their favorable tax status (that is, dividends paid are treated as deductions in arriving at taxable income)."). Source downloaded (UTC): 2026-09-10T01:33:58.997Z to 2026-09-10T01:33:58.997Z Record version: sha256:1ea7f95d1443871b10a76f706582c2b4e25637206ebb0751cf31628dad2d6819 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-974-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/810/974/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [810-974-15-1](https://asc.understandingaccounting.org/asc/810/974/#810-974-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:33:58.997Z to 2026-09-10T01:33:58.997Z Record version: sha256:36b6fe401a43ffdca5df4de28ab62b2c07a0c08bfe1ef10afc557889f999dd13 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 974-10-15. Source downloaded (UTC): 2026-09-10T01:34:04.543Z to 2026-09-10T01:34:04.543Z Record version: sha256:e4e675e7f30c243a987069c7946d3ce6cd34c384f46a569e87ea5d12c9b7480d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-974-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/810/974/#30-initial-measurement) SEC content: no ##### [810-974-30-1](https://asc.understandingaccounting.org/asc/810/974/#810-974-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:04.543Z to 2026-09-10T01:34:04.543Z Record version: sha256:5a6ca9474a7340ba85ceee2769b4c5580e93077ca975a2fad5d627322462b7b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [810-974-30-2](https://asc.understandingaccounting.org/asc/810/974/#810-974-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:04.543Z to 2026-09-10T01:34:04.543Z Record version: sha256:581601dd84260c7565152b8e69af424e16dc2153e84bbf9d42535714c5f64817 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [810-974-30-3](https://asc.understandingaccounting.org/asc/810/974/#810-974-30-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:04.543Z to 2026-09-10T01:34:04.543Z Record version: sha256:d626e44a57ed9b7cdd65de0a52e681c474ee42e94634960aae3f28ff9af04062 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [810-974-30-4](https://asc.understandingaccounting.org/asc/810/974/#810-974-30-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:04.543Z to 2026-09-10T01:34:04.543Z Record version: sha256:f16bd2fccc55911a0bd4d713f28c8fd42ee50837491487f8619e95c41d0bce8f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [810-974-30-5](https://asc.understandingaccounting.org/asc/810/974/#810-974-30-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:04.543Z to 2026-09-10T01:34:04.543Z Record version: sha256:b80f86c92f64cf0cb0d948925264f8015b65d8d0c3aa28dc45370269ce207364 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). #### Service Corporations ##### [810-974-30-6](https://asc.understandingaccounting.org/asc/810/974/#810-974-30-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:04.543Z to 2026-09-10T01:34:04.543Z Record version: sha256:06f2f01025d5e9dd31d7a4cbfdc7b7bd972aa1a29a3d9920a3c6bad59ca4efa1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Section 974-323-25 for the accounting used by a real estate investment trust for its investment in a [service corporation](https://asc.understandingaccounting.org/glossary/s/#service-corporation "A real estate investment trust may establish a service corporation to perform services for the real estate investment trust or for third parties. Service corporations may provide property management and leasing services, as well as services to acquire, develop, construct, finance, or sell real estate projects."). Source downloaded (UTC): 2026-09-10T01:34:06.992Z to 2026-09-10T01:34:06.992Z Record version: sha256:605534c8714f8fbc3b9cab72e465253301e7e581c5b672caeb12ac3c09717176 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-974-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/810/974/#35-subsequent-measurement) SEC content: no ##### [810-974-35-1](https://asc.understandingaccounting.org/asc/810/974/#810-974-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:06.992Z to 2026-09-10T01:34:06.992Z Record version: sha256:bb0560f9402e73438efc14939ed32829e686a9bdf4d44085a8c98d3396adadb2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [810-974-35-2](https://asc.understandingaccounting.org/asc/810/974/#810-974-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:06.992Z to 2026-09-10T01:34:06.992Z Record version: sha256:a729fe32f7ccb17169668743c3b0dfc7c78bc2aaf4dbe8e6e79c73aaa8814c0b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [810-974-35-3](https://asc.understandingaccounting.org/asc/810/974/#810-974-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:06.992Z to 2026-09-10T01:34:06.992Z Record version: sha256:787bd02a93d714f5055e88a00f8c3f34fcf3cfbf8c1b79954e09c4a1f35c1ecc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [810-974-35-4](https://asc.understandingaccounting.org/asc/810/974/#810-974-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:06.992Z to 2026-09-10T01:34:06.992Z Record version: sha256:6177f7bc5e7cf7e37808e69e492a9452e0acd5375b193d70323d9d42316b7060 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [810-974-35-5](https://asc.understandingaccounting.org/asc/810/974/#810-974-35-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:06.992Z to 2026-09-10T01:34:06.992Z Record version: sha256:d9c185fdd14665244685fe9f2dddf4d6abb2fbf48b4e378ab2fe3c6efa4d7106 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): 2026-09-10T01:34:10.635Z to 2026-09-10T01:34:24.202Z Record version: sha256:283784e7009551ac87c12c5a69d54bd016f11b61b00b8eb0f26a8784fa87961e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-978: Consolidation — Real Estate—Time-Sharing Activities ### Machine-generated study aids ```json { "summary": "This Subtopic tells a time-sharing developer-seller how to account for special-purpose entities (SPEs) it establishes in connection with selling time-sharing intervals. If the SPE structure is legally required by the jurisdiction in order to sell intervals to nonresident customers and the SPE holds no assets other than the time-sharing intervals and has no debt, the SPE is viewed as lacking economic substance and existing solely to facilitate sales; the seller then reports the unsold interests in the SPE as time-sharing inventory on its balance sheet rather than applying consolidation or equity/cost method accounting. All other SPEs are evaluated under the normal consolidation, VIE, and investment models.", "key_points": [ "A seller in time-sharing activities may establish a special-purpose entity, and Topic 810 governs whether an SPE that is a variable interest entity must be consolidated (810-978-25-1; 810-978-25-2).", "An SPE is treated as lacking economic substance and established solely to facilitate sales only if both conditions in 810-978-25-3 are met: (a) the SPE structure is legally required by the applicable jurisdiction to sell intervals to the nonresident customers targeted by the developer-seller, and (b) the SPE has no assets other than the time-sharing intervals and no debt.", "When both conditions are met, the seller presents the interests in the SPE not yet sold to end users as time-sharing inventory on its balance sheet and is not subject to consolidation, equity method, or cost method accounting (810-978-25-3).", "If the conditions are not met, accounting and presentation follow the treatment of investments in other SPE structures, including consolidation of controlled SPEs and SPEs in which no other entity has adequate capital at risk (810-978-25-3).", "For SPEs failing the test, apply the Variable Interest Entities Subsections of Subtopic 810-10 for VIEs, Topic 810 for non-VIE consolidation, and Subtopic 323-10 and Topic 321 when the investment is not consolidated (810-978-25-4).", "The Subtopic follows the scope of the Overall Subtopic in Section 978-10-15 (810-978-15-1)." ], "categories": [ "Consolidation", "Presentation", "Industry-specific", "Inventory and PP&E" ], "audience_level": "intermediate", "student_note": "This is a narrow industry exception: a legally mandated, asset-only, debt-free SPE used to sell intervals to foreign buyers is ignored as an entity and its unsold interests are simply shown as inventory. The common mistake is applying this inventory presentation to any developer-created SPE — both conditions in 810-978-25-3 must be met, or you fall back to the ordinary VIE/consolidation analysis.", "related_topics": [ "810-10", "978-10", "978-330", "323-10", "321" ], "key_concepts": [ "special-purpose entity", "variable interest entity", "time-sharing intervals", "time-sharing inventory", "entity lacking economic substance", "consolidation", "equity method investment", "balance sheet presentation" ] } ``` Source downloaded (UTC): 2026-09-10T01:34:10.635Z to 2026-09-10T01:34:10.635Z Record version: sha256:735f58e0b9cd6996265f099679b4f87d147eb7da2f5fa80dc0c1b5360b513c6e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-978-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/810/978/#00-status) SEC content: no ##### [810-978-00-1](https://asc.understandingaccounting.org/asc/810/978/#810-978-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:10.635Z to 2026-09-10T01:34:10.635Z Record version: sha256:ff774002f573bcc52e918eed4feffa97428b8404c9208757b2be540c3683df41 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
Time-SharingAmendedAccounting Standards Update No. 2014-0603/14/2014
Undivided Interest (2nd def.)SupersededAccounting Standards Update No. 2014-0603/14/2014
978-810-25-4AmendedAccounting Standards Update No. 2016-0101/05/2016
Source downloaded (UTC): 2026-09-10T01:34:14.522Z to 2026-09-10T01:34:14.522Z Record version: sha256:c7cf96c03599766bd6f220b49f7a9a047cd1cf9a8a138eb1b695e483cfe546d5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-978-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/810/978/#05-overview-and-background) SEC content: no ##### [810-978-05-1](https://asc.understandingaccounting.org/asc/810/978/#810-978-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:14.522Z to 2026-09-10T01:34:14.522Z Record version: sha256:84e4d74e3238c48bfd103b6e7119f199b1750f76ddbe986428ad3dec1239489a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses consolidation and recognition issues for certain special-purpose entities related to real estate [time-sharing](https://asc.understandingaccounting.org/glossary/t/#time-sharing "An arrangement in which a seller sells or conveys the right to occupy a dwelling unit for specified periods in the future. Forms of time-sharing arrangements include but are not limited to fixed and floating time, interval ownership, undivided interests, points programs, vacation clubs, right-to-use arrangements such as tenancy-for-years arrangements, and arrangements involving special-purpose entities. In this context, an undivided interest is a time-sharing arrangement that involves a tenant-in-common interest in a condominium unit or entire improved property, and in which the interest holder is assigned a specific period (generally, a specific week). The interest holder is also assigned a specific unit if the undivided interest is in the entire improved property.") activities. Source downloaded (UTC): 2026-09-10T01:34:17.931Z to 2026-09-10T01:34:17.931Z Record version: sha256:968eb5ab35dbfac9808ddc4c1bdb54437540090729bf0f88c7bf94b1eecc5359 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-978-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/810/978/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [810-978-15-1](https://asc.understandingaccounting.org/asc/810/978/#810-978-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:17.931Z to 2026-09-10T01:34:17.931Z Record version: sha256:70a4dd49420464acba23810fdccc1a4ff3639153de0579d0ed3403af0fc43cd6 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 978-10-15. Source downloaded (UTC): 2026-09-10T01:34:24.202Z to 2026-09-10T01:34:24.202Z Record version: sha256:f6025721fbb8267ba3462db4b2411ee02f5fb3185f9030ac11da23bf67bc3534 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-978-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/810/978/#25-recognition) SEC content: no ##### [810-978-25-1](https://asc.understandingaccounting.org/asc/810/978/#810-978-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:24.202Z to 2026-09-10T01:34:24.202Z Record version: sha256:98bcf79dc0e1b78aca4c6bff9f56c728c1800db7f77475f442e20167bda7f7a9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A seller may establish a [special-purpose entity](https://asc.understandingaccounting.org/glossary/s/#time-sharing-special-purpose-entity "An entity, typically a corporation or a trust, to which a seller transfers time-sharing real estate in exchange for the entity's stock, membership interests, or beneficial interests."). ##### [810-978-25-2](https://asc.understandingaccounting.org/asc/810/978/#810-978-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:24.202Z to 2026-09-10T01:34:24.202Z Record version: sha256:aab04b2ce1c63b3efaea2f033ef77ad9bed51d8c02b3fbf33f99247d20cead4e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Topic 810 provides guidance on whether special-purpose entities that are variable interest entities (VIEs) should be consolidated. ##### [810-978-25-3](https://asc.understandingaccounting.org/asc/810/978/#810-978-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:24.202Z to 2026-09-10T01:34:24.202Z Record version: sha256:24d897cb1b329a61d4028132dd3079fc30fc795da7e9e242b4bcef2506333370 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For balance-sheet presentation purposes, a special-purpose entity shall be viewed as an entity lacking economic substance and established solely for the purpose of facilitating sales if both of the following conditions are met: 1. a The special-purpose entity structure is legally required by the applicable jurisdiction(s) to sell [time-sharing](https://asc.understandingaccounting.org/glossary/t/#time-sharing "An arrangement in which a seller sells or conveys the right to occupy a dwelling unit for specified periods in the future. Forms of time-sharing arrangements include but are not limited to fixed and floating time, interval ownership, undivided interests, points programs, vacation clubs, right-to-use arrangements such as tenancy-for-years arrangements, and arrangements involving special-purpose entities. In this context, an undivided interest is a time-sharing arrangement that involves a tenant-in-common interest in a condominium unit or entire improved property, and in which the interest holder is assigned a specific period (generally, a specific week). The interest holder is also assigned a specific unit if the undivided interest is in the entire improved property.") intervals to the nonresident customers that the developer-seller wishes to sell to (for example, for purposes of being able to sell intervals to United States citizens in a country in which citizens of other countries are not allowed to own real estate). 2. b The special-purpose entity has no assets, other than the time-sharing intervals, and the special-purpose entity has no debt. In those circumstances, the seller should show on its balance sheet as time-sharing inventory the interests in the special-purpose entity not yet sold to end users and the seller would not be subject to the consolidation, equity method investment, or cost method investment accounting standards. If a special-purpose entity does not meet the conditions above, the accounting and presentation shall be consistent with investments in other special-purpose entity structures (for example, the consolidation of controlled special-purpose entities and special-purpose entities in which no other entity has adequate capital at risk). ##### [810-978-25-4](https://asc.understandingaccounting.org/asc/810/978/#810-978-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:24.202Z to 2026-09-10T01:34:24.202Z Record version: sha256:e1cdc36e50b62328194580bdb92edba5925a2833d9d8c601a4fdbcf6320a395f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In such cases, see the following guidance: 1. a The Variable Interest Entities Subsections of Subtopic 810-10 for guidance on whether special-purpose entities that represent VIEs should be consolidated 2. b Topic 810 for consolidation of entities that are not VIEs 3. c Subtopic 323-10 and Topic 321 for the accounting when the investment is not required to be consolidated. Source downloaded (UTC): 2026-09-10T01:34:28.274Z to 2026-09-10T01:34:48.416Z Record version: sha256:ed4ec58af64e5994f6d017e1f3090c0993249fa01aef7fe6c74a7ee69d914e46 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-980: Consolidation — Regulated Operations ### Machine-generated study aids ```json { "summary": "This Subtopic provides the consolidation guidance unique to entities with regulated operations. Its core rule is an exception to the normal requirement that intra-entity profit be eliminated in consolidation: profit on sales to a regulated affiliate need not be eliminated if the sales price is reasonable and it is probable that the rate-making process will produce future revenue approximately equal to that sales price from the affiliate's use of the products. Reasonableness is normally presumed when the regulator accepts or does not challenge the price.", "key_points": [ "Scope follows the Overall Regulated Operations Subtopic, Section 980-10-15 (810-980-15-1).", "Profit on sales to regulated affiliates shall not be eliminated in general-purpose financial statements if both criteria in 810-980-45-1 are met: the sales price is reasonable, and it is probable that future revenue approximately equal to the sales price will result through the rate-making process from the affiliate's use of the products.", "Both criteria must be satisfied; failing either means the normal intra-entity profit elimination applies (810-980-45-1).", "A sales price is usually considered reasonable if it is accepted or not challenged by the regulator governing the regulated affiliate (810-980-45-2).", "If the price is challenged, reasonableness is judged in light of the circumstances, for example by the return on investment earned by the manufacturing or construction operations or by comparing transfer prices with prices available from other sources (810-980-45-2)." ], "categories": [ "Consolidation", "Industry-specific", "Presentation" ], "audience_level": "intermediate", "student_note": "This is a rare industry exception to the bedrock consolidation rule that all intra-entity profit must be eliminated — worth remembering because it is counterintuitive. The common misunderstanding is thinking regulator silence alone is enough; you still need the separate probability that rates will recover revenue approximately equal to the sales price.", "related_topics": [ "980-10", "810-10", "980-340", "980-605", "850-10" ], "key_concepts": [ "intra-entity profit elimination", "regulated affiliate", "rate-making process", "reasonable sales price", "transfer pricing", "regulator acceptance", "consolidated financial statements" ] } ``` Source downloaded (UTC): 2026-09-10T01:34:28.274Z to 2026-09-10T01:34:28.274Z Record version: sha256:4e6c02705964d6b8b38c4a6e0e16efcc6b0d25c24b55f833406e8e987b389429 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-980-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/810/980/#05-overview-and-background) SEC content: no ##### [810-980-05-1](https://asc.understandingaccounting.org/asc/810/980/#810-980-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:28.274Z to 2026-09-10T01:34:28.274Z Record version: sha256:cc21a7d53db14a4b51265a620f8d3bd5d70a7a664ae86bae03aec02d540e05ce Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on consolidation for entities with regulated operations. Source downloaded (UTC): 2026-09-10T01:34:30.161Z to 2026-09-10T01:34:30.161Z Record version: sha256:02313b98de6b889ab061d62280a99e0bb0d008ff55ef6cf5a4a1859abe7700b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-980-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/810/980/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [810-980-15-1](https://asc.understandingaccounting.org/asc/810/980/#810-980-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:30.161Z to 2026-09-10T01:34:30.161Z Record version: sha256:d60d838019b1eba45dccf7091d50219a623e4634acc7edd1defb8d51c7c887fd 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 980-10-15. Source downloaded (UTC): 2026-09-10T01:34:31.981Z to 2026-09-10T01:34:31.981Z Record version: sha256:d24cfb7f0052edbc681e611c9008f571c3d8b60b5d73134c49957cf0a5d7920b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-980-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/810/980/#45-other-presentation-matters) SEC content: no #### Affiliated Sales ##### [810-980-45-1](https://asc.understandingaccounting.org/asc/810/980/#810-980-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:31.981Z to 2026-09-10T01:34:31.981Z Record version: sha256:413bc1ec9fdaf11af92bd8c3050d59a7f68e728bc6514970bd9f3f6c291d41d8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Profit on sales to regulated affiliates shall not be eliminated in general-purpose financial statements if both of the following criteria are met: 1. a The sales price is reasonable. 2. b It is probable that, through the rate-making process, future revenue approximately equal to the sales price will result from the regulated affiliate's use of the products. ##### [810-980-45-2](https://asc.understandingaccounting.org/asc/810/980/#810-980-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:31.981Z to 2026-09-10T01:34:31.981Z Record version: sha256:2d75b11d4bdc68ef97616659e8fa93b4190b3527c1956d5f612bbc766bcb1cda Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The sales price usually shall be considered reasonable if the price is accepted or not challenged by the regulator that governs the regulated affiliate. Otherwise, reasonableness shall be considered in light of the circumstances. For example, reasonableness might be judged by the return on investment earned by the manufacturing or construction operations or by a comparison of the transfer prices with prices available from other sources. Source downloaded (UTC): 2026-09-10T01:34:36.258Z to 2026-09-10T01:34:36.258Z Record version: sha256:c8bed30c67d13a3dba1194adfb01d51ccc83e7bc0e8e6cb256ee91aeca8450b6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-980-S00: SEC 00 Status [Read section](https://asc.understandingaccounting.org/asc/810/980/#sec-00-status) SEC content: yes ##### [810-980-S00-1](https://asc.understandingaccounting.org/asc/810/980/#810-980-S00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:36.258Z to 2026-09-10T01:34:36.258Z Record version: sha256:c617764a7cec614aa385e6bac25c6042f414cdcd29e02029bf80412d95ef4e17 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
980-810-S45-1SupersededAccounting Standards Update No. 2018-0403/09/2018
980-810-S99-1SupersededAccounting Standards Update No. 2018-0403/09/2018
Source downloaded (UTC): 2026-09-10T01:34:40.079Z to 2026-09-10T01:34:40.079Z Record version: sha256:c178bc9044f2e588534a58dd8d590a4ddab508a221792d4f4cdcc44d6afd18f8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-980-S45: SEC 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/810/980/#sec-45-other-presentation-matters) SEC content: yes ##### [810-980-S45-1](https://asc.understandingaccounting.org/asc/810/980/#810-980-S45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:40.079Z to 2026-09-10T01:34:40.079Z Record version: sha256:e335af023c875c5de43650f249e44312e05e10d0ec3fa741b66fdee748265c41 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-04](https://asc.understandingaccounting.org/updates/asu-2018-04/). #### Financing Through Construction Intermediaries ##### [810-980-S45-2](https://asc.understandingaccounting.org/asc/810/980/#810-980-S45-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:40.079Z to 2026-09-10T01:34:40.079Z Record version: sha256:679f7194289b29eb227f381f0e5dce94fbad4210656108f3944fb2769a10232a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [980-810-S99-2](https://asc.understandingaccounting.org/asc/810/980/#810-980-S99-2), SAB Topic 10.A, for SEC Staff views on the presentation of construction work in progress and related liabilities and interest expense being financed through a construction intermediary. Source downloaded (UTC): 2026-09-10T01:34:42.579Z to 2026-09-10T01:34:42.579Z Record version: sha256:d60919436667d57bf18b41b97a41160846c5e57a4579db2107e6a1b9064ce9e3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-980-S50: SEC 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/810/980/#sec-50-disclosure) SEC content: yes #### Financing Through Construction Intermediaries ##### [810-980-S50-1](https://asc.understandingaccounting.org/asc/810/980/#810-980-S50-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:42.579Z to 2026-09-10T01:34:42.579Z Record version: sha256:438cae82ac36f0cb31ff8f35b27b565fadd7d06ca0ca42bc39e75a129e4821c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [980-810-S99-2](https://asc.understandingaccounting.org/asc/810/980/#810-980-S99-2), SAB Topic 10.A, for SEC Staff views on disclosures when construction is financed through an intermediary. Source downloaded (UTC): 2026-09-10T01:34:48.416Z to 2026-09-10T01:34:48.416Z Record version: sha256:1e7462a8f5dba2b7272a76e29a93cefa096ba31a9c8ba7b1d86f30623094036a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-980-S99: SEC 99 SEC Materials [Read section](https://asc.understandingaccounting.org/asc/810/980/#sec-99-sec-materials) SEC content: yes ##### [810-980-S99-1](https://asc.understandingaccounting.org/asc/810/980/#810-980-S99-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:48.416Z to 2026-09-10T01:34:48.416Z Record version: sha256:e65c367618c9014e6d9917e987cdac87381b33092da438dbdaf9d04328736e02 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-04](https://asc.understandingaccounting.org/updates/asu-2018-04/). #### SEC Staff Guidance ##### [810-980-S99-2](https://asc.understandingaccounting.org/asc/810/980/#810-980-S99-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:48.416Z to 2026-09-10T01:34:48.416Z Record version: sha256:4979600cece1b97304fbb36bacfc9464353de5aa9d60e6528a99d9350094969d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of SAB Topic 10.A, Financing by Electric Utility Companies Through Use of Construction Intermediaries. - Facts: Some electric utility companies finance construction of a generating plant or their share of a jointly owned plant through the use of a "construction intermediary" which may be organized as a trust or a corporation. Typically the utility assigns its interest in property and other contract rights to the construction intermediary with the latter authorized to obtain funds to finance construction with term loans, bank loans, commercial paper and other sources of funds and that may be available. The intermediary's borrowings are guaranteed in part of the work in progress but more significantly, although indirectly, by the obligation of the utility to purchase the project upon completion and assume or otherwise settle the borrowings. The utility may be committed to provide any deficiency of funds which the intermediary cannot obtain and excess funds may be loaned to the utility by the intermediary. (In one case involving construction of an entire generating plant, the intermediary appointed the utility as its agent to complete construction.) On the occurrence of an event such as commencement of the testing period for the plant or placing the plant in commercial service (but not later than a specified date) the interest in the plant reverts to the utility and concurrently the utility must either assume the obligations issued by the intermediary or purchase them from the holders. The intermediary also may be authorized to borrow amounts for accrued interest when due and those amounts are added to the balance of the outstanding indebtedness. Interest is thus capitalized during the construction period at rates being charged by the lenders; however, it is deductible by the utility for tax purposes in the year of accrual. - Question: How should construction work in progress and related liabilities and interest expense being financed through a construction intermediary be reflected in an electric utility's financial statements? - Interpretive Response: The balance sheet of an electric utility company using a construction intermediary to finance construction should include the intermediary's work in progress in the appropriate caption under utility plant. The related debt should be included in long-term liabilities and disclosed either on the balance sheet or in a note. - The amount of interest cost incurred and the respective amounts expensed or capitalized shall be disclosed for each period for which an income statement is presented. Consequently, capitalized interest included as part of an intermediary's construction work in progress on the balance sheet should be recognized on the current income statement as interest expense with a corresponding offset to allowance for borrowed funds used during construction. Income statements for prior periods should also be restated. The amounts may be shown separately on the statement or included with interest expense and allowance for borrowed funds used during construction. - A note to the financial statements should describe briefly the organization and purpose of the intermediary and the nature of its authorization to incur debt to finance construction. The note should disclose the rate at which interest on this debt has been capitalized and the dollar amount for each period for which an income statement is presented.