Help Yourself, a not-for-profit organization, has a 5% economic interest in the Furnishing Bank, another not-for-profit organization. The organizations operate independently, have no directors in common, and have no transactions with each other. For financial reporting purposes, how should Help Yourself account for its interest in the Furnishing Bank?

Question

Quizplus · Accepted Answer

Given the lack of significant influence or control due to the small economic interest (5%) and the independence in operations and governance, Help Yourself should account for its interest in the Furnishing Bank through note disclosure only, rather than consolidation, the equity method, or the cost method.

Help Yourself, a Not-For-Profit Organization, Has a 5% Economic Interest