ASU 2023-05 — Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement

The amendments in this Update address the accounting for contributions made to a joint venture, upon its formation, in a joint venture’s separate financial statements. The amendments require that a joint venture apply a new basis of accounting upon formation. By applying a new basis of accounting, a joint venture, upon formation, will recognize and initially measure its assets and liabilities at fair value (with exceptions to fair value measurement that are consistent with the business combinations guidance).

The amendments in this Update affect the acounting for contributions received upon formation by entities that meet the definition of a joint venture or a corporate joint venture, as defined in the Master Glossary of the Codification.

This Accounting Standards Update is the final version of the Proposed Accounting Standards Update 2022-300—Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement.

Issued: August 23, 2023