Variable interest entity (VIE) is a term used by the United States Financial Accounting Standards Board (FASB) in FIN 46 to refer to an entity (the investee) in which the investor holds a controlling interest that is not based on the majority of voting rights. It is closely related to the concept of a special purpose entity. The importance of identifying a VIE is that a company needs to consolidate such entities if it is the primary beneficiary of the VIE.
Note: The guidance in FIN 46 and FIN 46R was subsequently revised when FASB issued Statement 167.
Criteria
A VIE is an entity meeting one of the following three criteria as elaborated in FASB ASC 810-10 [formerly FIN 46 (Revised)]:
The equity-at-risk is not sufficient to support the entity's activities (e.g.: the entity is thinly capitalized, the group of equity holders possess no substantive voting rights, etc.)
As a group, the equity-at-risk holders cannot control the entity
The economics do not coincide with the voting interests (commonly known as the "anti-abuse rule")
Variable Interest Entities-CPA FAR and BAR Exam 2023 and 2024-By Darius Clark
The CPA Exam expects a candidate to be familiar with the basics about variable interest entities. The exam could mix in a question or two in multiple choice questions or Simulation about Variable Interest Entities and how they might relate to Business Combinations, Consolidations and primary beneficiary.
published: 31 May 2023
FASB Variable Interest Entities and Private Companies
This brief case study video examines a key issue for the private company community: the new path for private companies with variable interest entities.
published: 28 Oct 2019
Variable Interest Entities
published: 03 Oct 2018
Variable Interest Entity Explained: The Enron Case
In this session, I discuss variable interest entity using Enron as an example
✔️Accounting students and CPA Exam candidates, check my website for additional resources: https://farhatlectures.com/
📧Connect with me on social media: https://linktr.ee/farhatlectures
#CPAEXAM #intermediateaccounting #accountingstudent
published: 07 Mar 2022
FAR: Balance Sheet, EPS and Cash Flows: Variable Interest Entity Model
Studying for the CPA Exam? Watch Becker’s Skills Practice video to learn about FAR: Balance Sheet, EPS and Cash Flows: Variable Interest Entity Model.
Visit the Becker CPA blog for more CPA Exam test-taking tips: https://www.becker.com/blog/cpa
Explore Becker’s CPA Exam Review products: https://www.becker.com/cpa-review
These videos were part of a previous version of Becker’s learning curriculum and may reference materials that no longer exist.
#CPA #CPAExam #FAR #FARCPAExam #FinancialAccounting #BalanceSheet #CashFlows #EPS
published: 02 Jul 2021
Consolidation Accounting ➡️ What are Variable Interest Entities?
This video is an overview of variable interest entities (VIE) for consolidated financial statements under ASC 810. This is the GAAP standard for accounting for the consolidation of business legal entities. The Variable Interest Model is what introduces the concept of a variable interest entity (VIE).
Why do you consolidate legal entities? A larger business generally speaking is made up multiple entities which reflect a full economic entity.
What are you consolidating? You are consolidating entities that you control and/or have power over which combines assets, liabilities, revenue and expenses along with eliminating any intercompany activity.
When do you consolidate financial? There are various reasons to consolidate a full economic entity, but several include: financing, audits, ...
published: 09 May 2023
Chinese Variable Interest Entities #Shorts
#Shorts
What Are Chinese Variable Interest Entities? VIE
Chinese companies seeking capital often go to the U.S. stock market to tap its deep-pocketed investors, bringing in more than $100 billion through first-time share sales over the past twenty years. This money flow was immensely profitable for all involved: The founders, the bankers, early investors and new shareholders. Yet all this now looks set to change. China has pledged to write new rules for companies going public outside the mainland and to step up oversight of those already trading offshore. It’s unclear whether Didi Global Inc.’s contentious initial public offering in June was the catalyst; the U.S. has been taking steps to force some Chinese firms to open their books or face delisting, and now has blocked new public offerin...
published: 27 Aug 2021
Consolidation Accounting: The Consolidation Models
You know how to apply ASC 810, Consolidation, to select the appropriate consolidation model, either the variable interest entity (VIE) model or the voting interest model. However, you now need to know exactly how to apply those models in practice and how to apply them under ASC 810. If this sounds like you, then this CPE-eligible, eLearning (1.0 CPE) course provides the information you’re looking for!
This is the second course in our 2-part consolidation accounting training series.
Take our self-study eLearning course here: https://revolution.gaapdynamics.com/learn/course/external/view/elearning/166/consolidation-accounting-the-consolidation-models
Learn more about GAAP Dynamics: https://www.gaapdynamics.com/
Check out our other online course on the Revolution: https://revolution.gaap...
published: 13 Jun 2022
Consolidation Accounting: The Consolidation Analysis
What is a variable interest entity? Why isn’t consolidation of another legal entity driven solely by voting interests? You get the answers to these questions and more in this CPE-eligible, eLearning course (1.5 CPE). In this online course, we introduce you to the two consolidation models in ASC 810 Consolidation and get you comfortable with the process used to determine which model is appropriate in various circumstances.
This is the first course in our 2-part consolidation accounting training series.
Take our self-study eLearning course here: https://revolution.gaapdynamics.com/learn/course/external/view/elearning/122/consolidation-accounting-the-consolidation-analysis
Learn more about GAAP Dynamics: https://www.gaapdynamics.com/
Check out our other online courses on the Revolution: ...
published: 13 Jun 2022
What is a VIE? Variable Interest Entities in China Tech
Variable Interest Entities, or VIEs, is one option international tech companies have to enter China without relying on a Chinese partner. Mark provides an overview of VIEs and the practical challenges faced in implementing a VIE model.
The CPA Exam expects a candidate to be familiar with the basics about variable interest entities. The exam could mix in a question or two in multiple choice que...
The CPA Exam expects a candidate to be familiar with the basics about variable interest entities. The exam could mix in a question or two in multiple choice questions or Simulation about Variable Interest Entities and how they might relate to Business Combinations, Consolidations and primary beneficiary.
The CPA Exam expects a candidate to be familiar with the basics about variable interest entities. The exam could mix in a question or two in multiple choice questions or Simulation about Variable Interest Entities and how they might relate to Business Combinations, Consolidations and primary beneficiary.
This brief case study video examines a key issue for the private company community: the new path for private companies with variable interest entities.
This brief case study video examines a key issue for the private company community: the new path for private companies with variable interest entities.
This brief case study video examines a key issue for the private company community: the new path for private companies with variable interest entities.
In this session, I discuss variable interest entity using Enron as an example
✔️Accounting students and CPA Exam candidates, check my website for additional res...
In this session, I discuss variable interest entity using Enron as an example
✔️Accounting students and CPA Exam candidates, check my website for additional resources: https://farhatlectures.com/
📧Connect with me on social media: https://linktr.ee/farhatlectures
#CPAEXAM #intermediateaccounting #accountingstudent
In this session, I discuss variable interest entity using Enron as an example
✔️Accounting students and CPA Exam candidates, check my website for additional resources: https://farhatlectures.com/
📧Connect with me on social media: https://linktr.ee/farhatlectures
#CPAEXAM #intermediateaccounting #accountingstudent
Studying for the CPA Exam? Watch Becker’s Skills Practice video to learn about FAR: Balance Sheet, EPS and Cash Flows: Variable Interest Entity Model.
Visit the...
Studying for the CPA Exam? Watch Becker’s Skills Practice video to learn about FAR: Balance Sheet, EPS and Cash Flows: Variable Interest Entity Model.
Visit the Becker CPA blog for more CPA Exam test-taking tips: https://www.becker.com/blog/cpa
Explore Becker’s CPA Exam Review products: https://www.becker.com/cpa-review
These videos were part of a previous version of Becker’s learning curriculum and may reference materials that no longer exist.
#CPA #CPAExam #FAR #FARCPAExam #FinancialAccounting #BalanceSheet #CashFlows #EPS
Studying for the CPA Exam? Watch Becker’s Skills Practice video to learn about FAR: Balance Sheet, EPS and Cash Flows: Variable Interest Entity Model.
Visit the Becker CPA blog for more CPA Exam test-taking tips: https://www.becker.com/blog/cpa
Explore Becker’s CPA Exam Review products: https://www.becker.com/cpa-review
These videos were part of a previous version of Becker’s learning curriculum and may reference materials that no longer exist.
#CPA #CPAExam #FAR #FARCPAExam #FinancialAccounting #BalanceSheet #CashFlows #EPS
This video is an overview of variable interest entities (VIE) for consolidated financial statements under ASC 810. This is the GAAP standard for accounting for ...
This video is an overview of variable interest entities (VIE) for consolidated financial statements under ASC 810. This is the GAAP standard for accounting for the consolidation of business legal entities. The Variable Interest Model is what introduces the concept of a variable interest entity (VIE).
Why do you consolidate legal entities? A larger business generally speaking is made up multiple entities which reflect a full economic entity.
What are you consolidating? You are consolidating entities that you control and/or have power over which combines assets, liabilities, revenue and expenses along with eliminating any intercompany activity.
When do you consolidate financial? There are various reasons to consolidate a full economic entity, but several include: financing, audits, equity raises, public company reporting, etc.
How do you consolidate business entities? Follow ASC 810 which defines how a parent entity should consolidate controlling financial interest either by a voting interest or by variable interest.
Full Video: What are Consolidated Financial Statements?
https://youtu.be/axc3o2rUFDY
Also check more investment accounting videos:
What do you eliminate when Consolidating Financial Statements? Part 2
https://youtu.be/P2QJ5_vOWLg
Consolidation Accounting: What is Noncontrolling Interest? Part 3
https://youtu.be/R-JfbxQr7_w
Twitter Thread on Consolidated Financial Statements: https://twitter.com/patrickbrayCPA/thread/1679913600259850262
====================================
Follow on Twitter: https://twitter.com/patrickbrayCPA
====================================
#consolidation #consolidationaccounting #financialreporting #asc810 #accounting #gaap #financialreporting #eliminations #elimination #variableinterestmodel #VIE #variableinterestentity #consolidated_financial_statements #consolidate #gaapaccounting #cpaexam #consolidating #consolidatefinancials #economicentity #subsidiarybooks #subsidiary #parentcompany #cpaexam #cpa #variableinterestentity #VIE
This video is an overview of variable interest entities (VIE) for consolidated financial statements under ASC 810. This is the GAAP standard for accounting for the consolidation of business legal entities. The Variable Interest Model is what introduces the concept of a variable interest entity (VIE).
Why do you consolidate legal entities? A larger business generally speaking is made up multiple entities which reflect a full economic entity.
What are you consolidating? You are consolidating entities that you control and/or have power over which combines assets, liabilities, revenue and expenses along with eliminating any intercompany activity.
When do you consolidate financial? There are various reasons to consolidate a full economic entity, but several include: financing, audits, equity raises, public company reporting, etc.
How do you consolidate business entities? Follow ASC 810 which defines how a parent entity should consolidate controlling financial interest either by a voting interest or by variable interest.
Full Video: What are Consolidated Financial Statements?
https://youtu.be/axc3o2rUFDY
Also check more investment accounting videos:
What do you eliminate when Consolidating Financial Statements? Part 2
https://youtu.be/P2QJ5_vOWLg
Consolidation Accounting: What is Noncontrolling Interest? Part 3
https://youtu.be/R-JfbxQr7_w
Twitter Thread on Consolidated Financial Statements: https://twitter.com/patrickbrayCPA/thread/1679913600259850262
====================================
Follow on Twitter: https://twitter.com/patrickbrayCPA
====================================
#consolidation #consolidationaccounting #financialreporting #asc810 #accounting #gaap #financialreporting #eliminations #elimination #variableinterestmodel #VIE #variableinterestentity #consolidated_financial_statements #consolidate #gaapaccounting #cpaexam #consolidating #consolidatefinancials #economicentity #subsidiarybooks #subsidiary #parentcompany #cpaexam #cpa #variableinterestentity #VIE
#Shorts
What Are Chinese Variable Interest Entities? VIE
Chinese companies seeking capital often go to the U.S. stock market to tap its deep-pocketed investors,...
#Shorts
What Are Chinese Variable Interest Entities? VIE
Chinese companies seeking capital often go to the U.S. stock market to tap its deep-pocketed investors, bringing in more than $100 billion through first-time share sales over the past twenty years. This money flow was immensely profitable for all involved: The founders, the bankers, early investors and new shareholders. Yet all this now looks set to change. China has pledged to write new rules for companies going public outside the mainland and to step up oversight of those already trading offshore. It’s unclear whether Didi Global Inc.’s contentious initial public offering in June was the catalyst; the U.S. has been taking steps to force some Chinese firms to open their books or face delisting, and now has blocked new public offerings. Either way it’s a major shakeup for Chinese companies -- which account for about 4% of America’s $50 trillion equity market -- as well as their private equity backers and Wall Street.
The Cyberspace Administration of China, the country’s internet regulator, has put forth strict new rules on overseas listings. Companies with data on at least 1 million people will be required to undergo a cybersecurity review before they can conduct an IPO abroad. The review will also look into potential national security risks from such IPOs. The regulator is seeking feedback before the rules are implemented. Regulators are also said to be considering requiring firms that have already gone public using the variable interest entity structure to seek approval for additional share offerings overseas. (A VIE creates a foreign shell company incorporated in places like Cayman Islands or the British Virgin Islands -- ostensibly outside the purview of Chinese regulators.) This would impact firms such as Alibaba Group Holding Ltd.
China already has strict rules on foreign investment in certain industries such as internet companies, banks, miners and private education firms. VIEs were a legally shaky workaround that enabled Chinese firms to get capital from foreign markets without giving away control. Some Chinese tech firms do have foreign backers. Softbank and Uber Inc. for instance hold sizable stakes in Didi, while Naspers Ltd. has a 29% stake in Tencent Holdings Ltd., making it the single biggest shareholder. The latest move by China’s Communist Party is aimed at ensuring sensitive data controlled by companies can’t be accessed by foreign regulators. More broadly, it’s part of campaign to impose stricter controls over the nation’s technology firms, many of which have near-monopolies in their fields and vast pools of user data -- the new oil of the digital economy.
Patrick's Books:
Statistics For The Trading Floor: https://amzn.to/3eerLA0
Derivatives For The Trading Floor: https://amzn.to/3cjsyPF
Corporate Finance: https://amzn.to/3fn3rvC
Patreon Page: https://www.patreon.com/PatrickBoyleOnFinance
Visit our website: www.onfinance.org
Follow Patrick on Twitter Here: https://twitter.com/PatrickEBoyle
Patrick Boyle On Finance Podcast:
Spotify: https://open.spotify.com/show/7uhrWlDvxzy9hLoW0EYf0b
Apple: https://podcasts.apple.com/us/podcast/patrick-boyle-on-finance/id1547740313
Google Podcasts: https://tinyurl.com/62862nve
Join this channel to support making this content:
https://www.youtube.com/channel/UCASM0cgfkJxQ1ICmRilfHLw/join
#Shorts
What Are Chinese Variable Interest Entities? VIE
Chinese companies seeking capital often go to the U.S. stock market to tap its deep-pocketed investors, bringing in more than $100 billion through first-time share sales over the past twenty years. This money flow was immensely profitable for all involved: The founders, the bankers, early investors and new shareholders. Yet all this now looks set to change. China has pledged to write new rules for companies going public outside the mainland and to step up oversight of those already trading offshore. It’s unclear whether Didi Global Inc.’s contentious initial public offering in June was the catalyst; the U.S. has been taking steps to force some Chinese firms to open their books or face delisting, and now has blocked new public offerings. Either way it’s a major shakeup for Chinese companies -- which account for about 4% of America’s $50 trillion equity market -- as well as their private equity backers and Wall Street.
The Cyberspace Administration of China, the country’s internet regulator, has put forth strict new rules on overseas listings. Companies with data on at least 1 million people will be required to undergo a cybersecurity review before they can conduct an IPO abroad. The review will also look into potential national security risks from such IPOs. The regulator is seeking feedback before the rules are implemented. Regulators are also said to be considering requiring firms that have already gone public using the variable interest entity structure to seek approval for additional share offerings overseas. (A VIE creates a foreign shell company incorporated in places like Cayman Islands or the British Virgin Islands -- ostensibly outside the purview of Chinese regulators.) This would impact firms such as Alibaba Group Holding Ltd.
China already has strict rules on foreign investment in certain industries such as internet companies, banks, miners and private education firms. VIEs were a legally shaky workaround that enabled Chinese firms to get capital from foreign markets without giving away control. Some Chinese tech firms do have foreign backers. Softbank and Uber Inc. for instance hold sizable stakes in Didi, while Naspers Ltd. has a 29% stake in Tencent Holdings Ltd., making it the single biggest shareholder. The latest move by China’s Communist Party is aimed at ensuring sensitive data controlled by companies can’t be accessed by foreign regulators. More broadly, it’s part of campaign to impose stricter controls over the nation’s technology firms, many of which have near-monopolies in their fields and vast pools of user data -- the new oil of the digital economy.
Patrick's Books:
Statistics For The Trading Floor: https://amzn.to/3eerLA0
Derivatives For The Trading Floor: https://amzn.to/3cjsyPF
Corporate Finance: https://amzn.to/3fn3rvC
Patreon Page: https://www.patreon.com/PatrickBoyleOnFinance
Visit our website: www.onfinance.org
Follow Patrick on Twitter Here: https://twitter.com/PatrickEBoyle
Patrick Boyle On Finance Podcast:
Spotify: https://open.spotify.com/show/7uhrWlDvxzy9hLoW0EYf0b
Apple: https://podcasts.apple.com/us/podcast/patrick-boyle-on-finance/id1547740313
Google Podcasts: https://tinyurl.com/62862nve
Join this channel to support making this content:
https://www.youtube.com/channel/UCASM0cgfkJxQ1ICmRilfHLw/join
You know how to apply ASC 810, Consolidation, to select the appropriate consolidation model, either the variable interest entity (VIE) model or the voting inter...
You know how to apply ASC 810, Consolidation, to select the appropriate consolidation model, either the variable interest entity (VIE) model or the voting interest model. However, you now need to know exactly how to apply those models in practice and how to apply them under ASC 810. If this sounds like you, then this CPE-eligible, eLearning (1.0 CPE) course provides the information you’re looking for!
This is the second course in our 2-part consolidation accounting training series.
Take our self-study eLearning course here: https://revolution.gaapdynamics.com/learn/course/external/view/elearning/166/consolidation-accounting-the-consolidation-models
Learn more about GAAP Dynamics: https://www.gaapdynamics.com/
Check out our other online course on the Revolution: https://revolution.gaapdynamics.com/learn
Subscribe to GAAP Dynamics to see more videos like this!
You know how to apply ASC 810, Consolidation, to select the appropriate consolidation model, either the variable interest entity (VIE) model or the voting interest model. However, you now need to know exactly how to apply those models in practice and how to apply them under ASC 810. If this sounds like you, then this CPE-eligible, eLearning (1.0 CPE) course provides the information you’re looking for!
This is the second course in our 2-part consolidation accounting training series.
Take our self-study eLearning course here: https://revolution.gaapdynamics.com/learn/course/external/view/elearning/166/consolidation-accounting-the-consolidation-models
Learn more about GAAP Dynamics: https://www.gaapdynamics.com/
Check out our other online course on the Revolution: https://revolution.gaapdynamics.com/learn
Subscribe to GAAP Dynamics to see more videos like this!
What is a variable interest entity? Why isn’t consolidation of another legal entity driven solely by voting interests? You get the answers to these questions an...
What is a variable interest entity? Why isn’t consolidation of another legal entity driven solely by voting interests? You get the answers to these questions and more in this CPE-eligible, eLearning course (1.5 CPE). In this online course, we introduce you to the two consolidation models in ASC 810 Consolidation and get you comfortable with the process used to determine which model is appropriate in various circumstances.
This is the first course in our 2-part consolidation accounting training series.
Take our self-study eLearning course here: https://revolution.gaapdynamics.com/learn/course/external/view/elearning/122/consolidation-accounting-the-consolidation-analysis
Learn more about GAAP Dynamics: https://www.gaapdynamics.com/
Check out our other online courses on the Revolution: https://revolution.gaapdynamics.com/learn
What is a variable interest entity? Why isn’t consolidation of another legal entity driven solely by voting interests? You get the answers to these questions and more in this CPE-eligible, eLearning course (1.5 CPE). In this online course, we introduce you to the two consolidation models in ASC 810 Consolidation and get you comfortable with the process used to determine which model is appropriate in various circumstances.
This is the first course in our 2-part consolidation accounting training series.
Take our self-study eLearning course here: https://revolution.gaapdynamics.com/learn/course/external/view/elearning/122/consolidation-accounting-the-consolidation-analysis
Learn more about GAAP Dynamics: https://www.gaapdynamics.com/
Check out our other online courses on the Revolution: https://revolution.gaapdynamics.com/learn
Variable Interest Entities, or VIEs, is one option international tech companies have to enter China without relying on a Chinese partner. Mark provides an overv...
Variable Interest Entities, or VIEs, is one option international tech companies have to enter China without relying on a Chinese partner. Mark provides an overview of VIEs and the practical challenges faced in implementing a VIE model.
Variable Interest Entities, or VIEs, is one option international tech companies have to enter China without relying on a Chinese partner. Mark provides an overview of VIEs and the practical challenges faced in implementing a VIE model.
The CPA Exam expects a candidate to be familiar with the basics about variable interest entities. The exam could mix in a question or two in multiple choice questions or Simulation about Variable Interest Entities and how they might relate to Business Combinations, Consolidations and primary beneficiary.
This brief case study video examines a key issue for the private company community: the new path for private companies with variable interest entities.
In this session, I discuss variable interest entity using Enron as an example
✔️Accounting students and CPA Exam candidates, check my website for additional resources: https://farhatlectures.com/
📧Connect with me on social media: https://linktr.ee/farhatlectures
#CPAEXAM #intermediateaccounting #accountingstudent
Studying for the CPA Exam? Watch Becker’s Skills Practice video to learn about FAR: Balance Sheet, EPS and Cash Flows: Variable Interest Entity Model.
Visit the Becker CPA blog for more CPA Exam test-taking tips: https://www.becker.com/blog/cpa
Explore Becker’s CPA Exam Review products: https://www.becker.com/cpa-review
These videos were part of a previous version of Becker’s learning curriculum and may reference materials that no longer exist.
#CPA #CPAExam #FAR #FARCPAExam #FinancialAccounting #BalanceSheet #CashFlows #EPS
This video is an overview of variable interest entities (VIE) for consolidated financial statements under ASC 810. This is the GAAP standard for accounting for the consolidation of business legal entities. The Variable Interest Model is what introduces the concept of a variable interest entity (VIE).
Why do you consolidate legal entities? A larger business generally speaking is made up multiple entities which reflect a full economic entity.
What are you consolidating? You are consolidating entities that you control and/or have power over which combines assets, liabilities, revenue and expenses along with eliminating any intercompany activity.
When do you consolidate financial? There are various reasons to consolidate a full economic entity, but several include: financing, audits, equity raises, public company reporting, etc.
How do you consolidate business entities? Follow ASC 810 which defines how a parent entity should consolidate controlling financial interest either by a voting interest or by variable interest.
Full Video: What are Consolidated Financial Statements?
https://youtu.be/axc3o2rUFDY
Also check more investment accounting videos:
What do you eliminate when Consolidating Financial Statements? Part 2
https://youtu.be/P2QJ5_vOWLg
Consolidation Accounting: What is Noncontrolling Interest? Part 3
https://youtu.be/R-JfbxQr7_w
Twitter Thread on Consolidated Financial Statements: https://twitter.com/patrickbrayCPA/thread/1679913600259850262
====================================
Follow on Twitter: https://twitter.com/patrickbrayCPA
====================================
#consolidation #consolidationaccounting #financialreporting #asc810 #accounting #gaap #financialreporting #eliminations #elimination #variableinterestmodel #VIE #variableinterestentity #consolidated_financial_statements #consolidate #gaapaccounting #cpaexam #consolidating #consolidatefinancials #economicentity #subsidiarybooks #subsidiary #parentcompany #cpaexam #cpa #variableinterestentity #VIE
#Shorts
What Are Chinese Variable Interest Entities? VIE
Chinese companies seeking capital often go to the U.S. stock market to tap its deep-pocketed investors, bringing in more than $100 billion through first-time share sales over the past twenty years. This money flow was immensely profitable for all involved: The founders, the bankers, early investors and new shareholders. Yet all this now looks set to change. China has pledged to write new rules for companies going public outside the mainland and to step up oversight of those already trading offshore. It’s unclear whether Didi Global Inc.’s contentious initial public offering in June was the catalyst; the U.S. has been taking steps to force some Chinese firms to open their books or face delisting, and now has blocked new public offerings. Either way it’s a major shakeup for Chinese companies -- which account for about 4% of America’s $50 trillion equity market -- as well as their private equity backers and Wall Street.
The Cyberspace Administration of China, the country’s internet regulator, has put forth strict new rules on overseas listings. Companies with data on at least 1 million people will be required to undergo a cybersecurity review before they can conduct an IPO abroad. The review will also look into potential national security risks from such IPOs. The regulator is seeking feedback before the rules are implemented. Regulators are also said to be considering requiring firms that have already gone public using the variable interest entity structure to seek approval for additional share offerings overseas. (A VIE creates a foreign shell company incorporated in places like Cayman Islands or the British Virgin Islands -- ostensibly outside the purview of Chinese regulators.) This would impact firms such as Alibaba Group Holding Ltd.
China already has strict rules on foreign investment in certain industries such as internet companies, banks, miners and private education firms. VIEs were a legally shaky workaround that enabled Chinese firms to get capital from foreign markets without giving away control. Some Chinese tech firms do have foreign backers. Softbank and Uber Inc. for instance hold sizable stakes in Didi, while Naspers Ltd. has a 29% stake in Tencent Holdings Ltd., making it the single biggest shareholder. The latest move by China’s Communist Party is aimed at ensuring sensitive data controlled by companies can’t be accessed by foreign regulators. More broadly, it’s part of campaign to impose stricter controls over the nation’s technology firms, many of which have near-monopolies in their fields and vast pools of user data -- the new oil of the digital economy.
Patrick's Books:
Statistics For The Trading Floor: https://amzn.to/3eerLA0
Derivatives For The Trading Floor: https://amzn.to/3cjsyPF
Corporate Finance: https://amzn.to/3fn3rvC
Patreon Page: https://www.patreon.com/PatrickBoyleOnFinance
Visit our website: www.onfinance.org
Follow Patrick on Twitter Here: https://twitter.com/PatrickEBoyle
Patrick Boyle On Finance Podcast:
Spotify: https://open.spotify.com/show/7uhrWlDvxzy9hLoW0EYf0b
Apple: https://podcasts.apple.com/us/podcast/patrick-boyle-on-finance/id1547740313
Google Podcasts: https://tinyurl.com/62862nve
Join this channel to support making this content:
https://www.youtube.com/channel/UCASM0cgfkJxQ1ICmRilfHLw/join
You know how to apply ASC 810, Consolidation, to select the appropriate consolidation model, either the variable interest entity (VIE) model or the voting interest model. However, you now need to know exactly how to apply those models in practice and how to apply them under ASC 810. If this sounds like you, then this CPE-eligible, eLearning (1.0 CPE) course provides the information you’re looking for!
This is the second course in our 2-part consolidation accounting training series.
Take our self-study eLearning course here: https://revolution.gaapdynamics.com/learn/course/external/view/elearning/166/consolidation-accounting-the-consolidation-models
Learn more about GAAP Dynamics: https://www.gaapdynamics.com/
Check out our other online course on the Revolution: https://revolution.gaapdynamics.com/learn
Subscribe to GAAP Dynamics to see more videos like this!
What is a variable interest entity? Why isn’t consolidation of another legal entity driven solely by voting interests? You get the answers to these questions and more in this CPE-eligible, eLearning course (1.5 CPE). In this online course, we introduce you to the two consolidation models in ASC 810 Consolidation and get you comfortable with the process used to determine which model is appropriate in various circumstances.
This is the first course in our 2-part consolidation accounting training series.
Take our self-study eLearning course here: https://revolution.gaapdynamics.com/learn/course/external/view/elearning/122/consolidation-accounting-the-consolidation-analysis
Learn more about GAAP Dynamics: https://www.gaapdynamics.com/
Check out our other online courses on the Revolution: https://revolution.gaapdynamics.com/learn
Variable Interest Entities, or VIEs, is one option international tech companies have to enter China without relying on a Chinese partner. Mark provides an overview of VIEs and the practical challenges faced in implementing a VIE model.
Variable interest entity (VIE) is a term used by the United States Financial Accounting Standards Board (FASB) in FIN 46 to refer to an entity (the investee) in which the investor holds a controlling interest that is not based on the majority of voting rights. It is closely related to the concept of a special purpose entity. The importance of identifying a VIE is that a company needs to consolidate such entities if it is the primary beneficiary of the VIE.
Note: The guidance in FIN 46 and FIN 46R was subsequently revised when FASB issued Statement 167.
Criteria
A VIE is an entity meeting one of the following three criteria as elaborated in FASB ASC 810-10 [formerly FIN 46 (Revised)]:
The equity-at-risk is not sufficient to support the entity's activities (e.g.: the entity is thinly capitalized, the group of equity holders possess no substantive voting rights, etc.)
As a group, the equity-at-risk holders cannot control the entity
The economics do not coincide with the voting interests (commonly known as the "anti-abuse rule")