FASB Defers FAS 150 Provisions Related to Mandatorily Redeemable Noncontrolling Interests

Provided by PricewaterhouseCoopers, CFOdirect Network

At Wednesday's Financial Accounting Standards Board meeting, the Board decided to defer the provisions of paragraphs 9 and 10 of FAS 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity, (and related guidance in the appendices) as they apply to mandatorily redeemable noncontrolling interests.

Those provisions require that mandatorily redeemable minority interests within the scope of FAS 150 be classified as a liability on a parent company's financial statements in certain situations, including when a finite-lived entity is consolidated. The deferral of those provisions is expected to remain in effect while these interests are addressed in either Phase II of the FASB's Liabilities and Equity project or Phase II of the FASB's Business Combinations Project.

The Board also decided to (1) preclude any "early" adoption of the provisions in paragraphs 9 and 10 for these noncontrolling interests during the deferral period, and (2) require the restatement of any financial statements that have been issued where these provisions of FAS 150 were applied to mandatorily redeemable noncontrolling interests.

The Board's decisions with respect to the deferral, early adoption, and restatement will likely be issued in conjunction with the finalization of the proposed FSP 150-c, Effective Date and Transition for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities of FAS 150. While the specific timing of the final issuance of FSP 150-c was not stated, it is expected that the FSP will be issued in the very near term.

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