substantive participating rights

Broad Transactions4

1. 810-10Overall810 Consolidation

   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.

2. 810-20Control of Partnerships and Similar Entities810 Consolidation

   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 Every paragraph in the subtopic — Sections 05, 15, 25, 45, and 55 — was superseded by ASU 2015-02 (Amendments to the Consolidation Analysis).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.

3. 810-958Not-for-Profit Entities810 Consolidation

   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.

4. 810-970Real Estate—General810 Consolidation

   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.