RSM321H1 Chapter Notes - Chapter 9: Guaranteed Rate, Financial Statement, Deferred Income
Document Summary
Special-purpose entities (spe) and variable interest entities (vie) In this chapter, we have examined four different topics, which almost wind up our study of business combinations and the preparation of consolidated financial statements. In the previous chapters, the parent controlled the subsidiary through voting rights. However, there are other means of controlling the operating and financial policies of the subsidiary. Consolidation is required for a variable-interest entity (vie), which is controlled by a primary beneficiary on a basis of control other than through ownership of a voting interest. Some points to remember for special-purpose entities (spes): control of an spe is usually based on who directs the key activities of the spe. In fact, a sponsoring enterprise usually owned very little, if any, of the voting shares of the spe. Spe should be consolidated when the substance of the relationship between an entity and the. Spe indicates that the spe is controlled by that entity.
