Hoyle Part2 - Simons Software Controller: In response to...

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Simons Software Controller: In response to you inquiry concerning Young Manufacturing, my professional opinion is that your current contract with them is a Variable Interest Entity (VIE) and needs to be consolidated on the financial statements. Additionally, GAAP (SFAS 167) requires you to make ongoing reassessments of whether or not Simons Software is the primary beneficiary of a variable interest entity. This opinion is based my understanding of SFAS 167, “Consolidation of Variable Interest Entities”. A variable interest entity is any entity in which the investor, your company, holds a controlling interest which is not based on the majority voting rights. SFAS167 amends FASB Interpretation No. 46 and requires companies to perform an analysis to determine whether the company’s variable interest gives it controlling financial interest in the variable interest entity. This analysis identifies the primary beneficiary of a VIE as an enterprise using two characteristics that must both be true. First, your company must have the power to direct activities of the VIE that most significantly
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Hoyle Part2 - Simons Software Controller: In response to...

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