What to consider as an equity method investee

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.

Level of significance

The amount of information a registrant must present about an investee depends on the level of the investee’s significance level. 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:

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.