Fundamentals of Advanced Accounting
Fundamentals of Advanced Accounting
6th Edition
ISBN: 9780077862237
Author: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
Publisher: McGraw-Hill Education
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Chapter 6, Problem 1Q
To determine

Explain the term variable interest entity (VIE).

Expert Solution & Answer
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Answer to Problem 1Q

A legal business structure is known as variable interest entity when an investor has interest which is controlled even when not have majority of voting rights.

Explanation of Solution

A legal business structure is known as variable interest entity when an investor has interest which is controlled even when not have majority of voting rights. Commonly VIE activities includes leasing, financial assets, research and development, hedging financial instruments, and other arrangements transfers. Primary beneficiary is a term which is used to designate that party having control over VIE’s financial interest.

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