On Jan. 12, 2017, the Financial Accounting Standards Board (FASB) issued ASU No. 2017-02, Not-for-Profit Entities—Consolidation (Subtopic 958-810): Clarifying When a Not-for-Profit Entity That Is a General Partner or a Limited Partner Should Consolidate a For-Profit Limited Partnership or Similar Entity.
Current generally accepted accounting principles require an NFP (not-for-profit entity) that is a general partner of a for-profit limited partnership to apply the consolidation guidance in Subtopic 810-20, Consolidation — Control of Partnerships and Similar Entities. ASU No. 2015-02 superseded the guidance in Subtopic 810-20 and added new guidance for limited partnerships, but not for general partnerships. As a result, once ASU No. 2015-02 becomes effective, the guidance in Subtopic 810-20 will no longer exist, and an NFP that is a general partner of a for-profit limited partnership will be required to apply the general consolidation guidance in Subtopic 810-10.
ASU 2017-02 maintains how NFP general partners currently apply the consolidation guidance in Subtopic 810-20 by including that guidance within Subtopic 958-810. ASU No. 2017-02 also adds to Subtopic 958-810 the general guidance in Subtopic 810-10 on when NFP limited partners should consolidate a limited partnership.
The amendments in this update are effective for NFPs for fiscal years beginning after December 15, 2016. The standard will become testable on the CPA exam October 2017.
It’s important to be aware of authoritative literature changes as these changes could impact how you answer the questions within that topic. Since exam material could conceivably change from one exam testing window to another, turn to Surgent for the latest updates. Our CPA Review team stays informed of all authoritative and pronouncement changes and ensures you’ll receive the news as soon as we do!
Valerie Wendt is Vice President of Product Development & Customer Experience for Surgent CPA Review. Valerie is a graduate of Saint Leo University in Saint Leo, Florida and holds a Project Management Certificate from Villanova University. Before joining Surgent, Valerie was Senior Product Manager for Thomson Reuters overseeing their CPA Review and CPE business lines.
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