colorful paint

Perspectives

What to consider as an equity method investee

On the Radar: Equity method investments & SEC reporting

The financial statements required by SEC rules related to equity method investments can significantly affect a registrant’s financial reporting. This edition of On the Radar provides equity method investees with comprehensive guidance on SEC equity method investment reporting considerations, as well as interpretations and examples.

${column-img-description}

Identification of operating segments

SEC registrants may have equity method investments, including those accounted for under the fair value option or hypothetical liquidation basis. In their filings with the SEC, they are required to provide financial information about any significant equity method investees. Therefore, such registrants must consider whether to provide financial information about such investee in any report filed with the SEC that includes their own financial statements.

On the Radar: SEC reporting considerations for equity method investees

Level of significance

The amount of information a registrant must present about an investee depends on the level of the investee’s significance. To determine the significance level, a registrant performs the applicable tests (as indicated below) for each equity method investee individually and, in certain cases, for all such investees in the aggregate:

  • The investment test
  • The asset test
  • The income test

The test that results in the highest significance level will be used to establish the financial reporting requirements. A registrant may use the following table to determine which information must be presented:

 

 

The SEC staff may issue comments related to how a registrant complied with SEC rules and ask the registrant to provide the calculations it used in the significance tests.

Continue your SEC reporting considerations for equity method investees learning

Deloitte’s Roadmap SEC Reporting Considerations for Equity Method Investees provides comprehensive guidance on this topic. For guidance on the U.S. GAAP requirements related to equity method investees, see Deloitte’s Roadmap Equity Method Investments and Joint Ventures.

group of people under sky at nigth

Contact us

 
 
 
 
 
 
  Yes         No

Fullwidth SCC. Do not delete! This box/component contains JavaScript that is needed on this page. This message will not be visible when page is activated.

Insert Custom HTML fragment. Do not delete! This box/component contains code that is needed on this page. This message will not be visible when page is activated.
+++ DO NOT USE THIS FRAGMENT WITHOUT EXPLICIT APPROVAL FROM THE CREATIVE STUDIO DEVELOPMENT TEAM +++

Did you find this useful?