Read this essay on variable interest entity come browse our large digital warehouse of free sample essays get the knowledge you need in order to pass your classes and more. A note on the variable interest entity (vie) structure that is commonly used for chinese companies the note explains the history and origins of the structure, the elements of the structure, the key contracts that make up the structure and the key clauses required in each contract to give effect to the structure. Variable interest entities complexity of issues is confirmed by the issuance of several fsps including fasb staff position no fin 46(r)-6, determining the variability to be considered in applying fasb interpretation no 46(r) which has some really helpful examples slideshow 6601715.
Variable-interest entity assessment each entity that is considered for consolidation must first be evaluated to determine if it is a variable-interest entity (vie) and, if it is, which other entity is its primary beneficiary. Free essay: variable interest entities one topic that has generated much discussion and even some bad blood in the accounting profession and business. A variable interest that a public company has in another entity may manifest itself outside of ownership or equity investment and could be a contractual or other monetary interest that changes with such entity's fair value. The reorganization assumes that once a company decides to follow the voting interest entities or variable interest entities accounting guidance, the company could go directly to the needed category the.
Variable interest entity disclosure tabular disclosure of the significant judgments and assumptions made in determining whether a variable interest (as defined) held. Variable interest entity, enron, special purpose entity accounting for stock acquisitions, parent, subsidiary, noncontrolling interest, elimination entries g. In 2011, after a series of public events, the variable interest entity (vie) structure re-attracted a lot of attention and concerns from the prc authorities, entrepreneurs, investors and other market participants this essay will describe the circumstances in which the vie structure was created, how it has been used and the changes in the.
Variable interest entities: risks and rewards october 2013 despite their pervasive use in china, the term variable interest entity (vie) is actually. Varying degrees of interest in a company or entity can affect the amount a larger company is liable to report both for taxation purposes and to investors who make decisions about the entity's future. Changes to the consolidation analyses variable interest entities while these amendments make consolidation under the variable model generally less likely, it.
Basis of presentation and summary of significant to apply the variable interest entity (vie) combined with a variable interest that gives us the right to. Variable interest entities can be complex organizations, so a deeper discussion about them is beyond the scope of this article in addition, specifics about the consolidation process are not relevant to your understanding of what a variable interest entity is and how it should be accounted for, so we'll leave that discussion alone for now. Under the new guidance - fasb accounting standards update no 2014-07, applying variable interest entities guidance to common control leasing arrangements - the private company would instead make certain disclosures about the lessor and the leasing arrangement.
A variable interest entity is a method that can be used to own a particular business entity with this type of entity, the amount of rights of the controlling owner of the business are limited compared to most other business structures. Ppc's guide to related parties (including variable interest entities) addresses issues commonly associated with accounting for and disclosing related-party transactions, specifically focusing on accounting for variable interests in variable interest entities (vies.
Let us first start by explaining what a variable interest entity (vie) is a vie is a legal entity that is subject to consolidation generally, these entities are usually designed to support another entity but this may not always be the case. The hong kong company had a wholly-owned subsidiary in china (wfoe), which in turn had a customary suite of vie, or variable interest entity, agreements giving it control over and all the economic benefits of a cold-rolled steel company in hebei province. Definition of variable interest entity: vie a legal business structure which does not have enough capital to support itself due to its lack of equity. Latest edition: kpmg provides its guidance on the consolidation of vies - with in-depth analysis and examples.