Understanding the Consolidation of Variable Interest Entity Rules (Currently Unavailable)

Author: Steven C. Fustolo

This course presents the consolidation of variable interest entity rules found in ASC 810, Consolidation (previously found in FASB Interpretation No. 46R, Consolidation of Variable Entities-An Interpretation of ARB No. 51, as amended by FASB No. 167, Amendments to FASB Interpretation No. 46R (FIN 46R)), in a comprehensive format. Following the review of the old rules for consolidation of special purpose entities (SPEs) and the background on consolidations are the general rules of FIN 46R. These include the application of FIN 46R and the special exemptions from FIN 46R. The basic rules of FIN 46R, which include three requirements, are covered in complete detail throughout the remaining course material.

Publication Date: April 2012

Number of Pages: 286

Designed For
Accountants who need a review of the prior rules and changes going forward.

Topics Covered

• The Old Rules for Consolidations and SPEs
• Overview of GAAP Rules for Investments and Consolidations
• Consolidations and Combined Statements
• Exceptions to the More Than 50% Ownership Test- Consolidation
• Arrangements and Rabbi Trusts
• FASB Interpretation No. 46R- Consolidation of Variable Interest Entities-An Interpretation of ARB No. 51
• General Rules, Application, Special Exemptions, and Background on FIN 46R
• Key Changes Made to Interpretation No. 46R by FASB No. 167
• What is a VIE?
• Rules of FIN 46R
• Basic Rules for Consolidation- 3 Requirements
• Initial Test and Measurement of the VIE By the Primary Beneficiary
• Disclosures Under FIN 46R
• Effective Date and Transition Requirements of FIN 46R
• Avoiding the Consolidation Rules Under FIN 46R

Learning Objectives

• Describe when to use consolidations vs. combined statements.
• Define a variable interest entity.
• List the four exemptions from FIN 46R's application.
• List the three requirements for applying FIN 46R.
• Select the qualitative and quantitative methods to demonstrate sufficiency of equity.
• Explain when an entity is a VIE.
• Learn who must perform the VIE test and when VIE status must be reconsidered.
• Recognize when a company has attempted to abuse the reconsideration loophole.
• Identify those parties that hold variable interests in the VIE.
• Define a variable interest.
• Explain types of variable interests and their variability.
• Define a primary beneficiary.
• Recognize when lessees should consolidate a lessor.
• Identify when there is an implicit variable interest.
• Perform the initial test for consolidation using the look-back approach.
• Perform the initial test for consolidation as of the implementation date.
• Learn how to avoid the consolidation rules under FIN 46R.

Level
Overview

Instructional Method
Self-Study

NASBA Field of Study
Accounting (12 hours)

Program Prerequisites
None

Advance Preparation
None