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Perspectives

A roadmap to consolidation — identifying a controlling financial interest

This publication is a comprehensive guide to navigating the frequently complex consolidation accounting models. The 2019 edition reflects amendments made by FASB Accounting Standards Update (ASU) 2018-17 related to the private-company alternative and the alignment of certain assessments performed in the consolidation analysis. While the amendments do not represent wholesale changes such as those made by ASU 2015-02, they may significantly affect private companies that wish to apply the private-company alternative as well as certain decision makers.

We are pleased to present the 2019 edition of A Roadmap to Consolidation — Identifying a Controlling Financial Interest. This publication is a comprehensive guide to navigating the frequently complex consolidation accounting models. The 2019 edition reflects amendments made by ASU 2018-17 related to the private-company alternative and the alignment of certain assessments performed in the consolidation analysis. While the amendments do not represent wholesale changes such as those made by ASU 2015-02, they may significantly affect private companies that wish to apply the private-company alternative as well as certain decision makers. Appendix H summarizes the changes made to this Roadmap since the 2018 edition.

The Roadmap breaks down the requirements in ASC 810 and reconstructs them in a logical narrative, making them easier to understand and apply. While the discussion focuses primarily on the complexities of identifying whether a legal entity is a variable interest entity (VIE) and whether a reporting entity should consolidate the VIE, it also addresses the voting interest entity model and provides a framework for its application.

Several of the Roadmap’s chapters feature a “thumbnail image” that, when clicked, links to a flowchart with each step of the consolidation analysis. If you get lost when performing the analysis, we recommend grounding yourself by going back to the flowchart at the end of the Introduction. (Believe us, it can be easy to lose your way!)

We encourage you to use this Roadmap as a guide throughout your application of the consolidation guidance. However, the Roadmap is not a substitute for consulting with Deloitte professionals on complex accounting questions and transactions.

We hope that you find this publication a valuable resource, and we welcome your suggestions for improvements as new chapters in the consolidation story unfold.

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The Roadmap Series contains periodic collections of our accounting guidance on selected topics of broad interest to the financial reporting community.

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