Hoyle Part2 - October 4, 2010 Natalie Simons Financial...

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October 4, 2010 Natalie Simons Financial Controller Simons Software 52 Wright Road Lititz PA, 17543 Dear Natalie Simons: The advice is according to the information that you provided concerning the issue at hand. In response to you inquiry in regards to 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”. I have attached a memo explaining specifically the characteristics of a VIE that are identified by the FASB. (See memo 1 attached) A variable interest entity is any entity in which the investor, your company, holds a controlling interest is not based on the majority voting rights. SFAS167 amends FASB Interpretation No. 46 and requires companies to perform a qualitative analysis to determine if 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
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This note was uploaded on 12/12/2010 for the course RELIGION 309 taught by Professor Murray during the Spring '10 term at Central Texas College.

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Hoyle Part2 - October 4, 2010 Natalie Simons Financial...

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