FASB Issues Amendments Simplifying Consolidation Accounting Rules

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Feb. 18— The Financial Accounting Standards Board issued new accounting rules to provide guidance—to users and preparers of financial statements—on whether they must consolidate certain legal entities, such as limited partnerships, limited liability corporations and securitization structures.

FASB Feb. 18 issued Accounting Standards Update, ASU No. 2015-02, Consolidation (Topic ASC 810): Amendments to the Consolidation Analysis, to address concerns that current guidance doesn't provide sufficiently useful information for investors and other financial statement users.

Some companies organize their corporate activity by using legal vehicles such as LPs or LLCs because of the advantages they can provide. The new rules are important because they will simplify consolidation accounting, thus enabling financial statement users to better analyze the reporting company's economic and operational results.