Proposed ASU 2015-280 — Investments—Equity Method and Joint Ventures (Topic 323)

To simplify the accounting for equity method investments, the Board proposes to eliminate the requirement for an equity method investor to account for the basis difference, which is the difference between the cost of an investment and the investor's proportionate share of the net assets of the investee. Topic 323 currently requires an entity to determine the acquisition date fair value of the identifiable assets and liabilities assumed in the same manner as a business combination. The equity method investor's proportionate share of the difference between the fair value of the investee's identifiable assets and liabilities assumed and the book value of recorded assets and liabilities assumed generally must be accounted for in net income in subsequent periods. The proposed Update would eliminate the requirement for an entity to calculate the total basis difference and attribute the basis difference to its various components as well as remove the need for an entity to track the components of the basis difference (for example, intangible assets, goodwill, and deferred tax liabilities) in what is commonly referred to as memo accounts and account for any resulting amortization.

To simplify the accounting for equity method investments, the Board proposes to eliminate the requirement that an entity retroactively adopt the equity method of accounting if an investment qualifies for use of the equity method as a result of an increase in the level of ownership.

For more information, see the following:

Issued: June 5, 2015

Comments Due: August 4, 2015

The Exposure Draft identifies the Codification Sections that may be changed upon issuance of this guidance.

• 323-10-35-1
• 323-10-50-1
• 323-10-65-1