The Financial Accounting Standards Board wants to allow companies to use a certain accounting method for a broader range of tax-credit investments, enabling them to record similar spending in a consistent way.

Under the so-called proportional amortization method, companies write down the investment in proportion to their allocation of tax credits and other tax benefits, such as depreciation, in a particular period. Since 2014, companies have been able to use this method when accounting for investments related to affordable housing tax credits, known as a Low-Income Housing Tax Credit, but not to other types of tax credits.

The U.S. accounting standard setter on Wednesday voted to propose permitting companies to use the proportional amortization method for any tax-credit investments that meet certain criteria. The vote came about 10 months after it added the project to its agenda featuring emerging issues.

Renewable-energy tax credits have gained popularity among companies in recent years amid pressure from investors to step up their corporate sustainability efforts. The FASB’s proposal mainly affects public and private financial institutions, such as banks and insurers, which frequently make these types of investments. Firms invest in tax credits in part to reduce their tax liabilities.

Businesses, which are currently required to use the equity method—in which they record a portion of investees’ gains and losses—to account for most tax-credit investments, have said the proportional amortization approach is a more accurate reflection of the value of a range of investments.

Accounting for tax-credit investments should be consistently applied and not be based on the specific type of program, said Joshua Stein, vice president of accounting and financial management at the American Bankers Association, a trade group.

“The current inconsistency in accounting for tax credit investments negatively impacts users of financial statements, preparers, and ultimately those who are served by the underlying projects,” Mr. Stein last year said in a letter to the FASB. The ABA didn’t immediately respond to a request for comment.

The FASB aims to issue a formal proposal in August and will allow the public 45 days to comment on it, a spokeswoman said. The board could finalize the rule next year, she said.

“There is some desire to expand the playing field,” FASB board member Christine Botosan said Wednesday, referring to use of the proportional amortization method.

Write to Mark Maurer at [email protected]

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