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Consolidation: Interests held through related parties under common control
Upon the effective date of Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2015-02,Consolidation (Topic 810): Amendments to the Consolidation Analysis, a single decision maker of a variable interest entity (VIE) is required to consider indirect economic interests in the entity held through related parties on a proportionate basis when determining whether it is the primary beneficiary of that VIE, unless the single decision maker and its related parties are under common control. If a single decision maker and its related parties are under common control, the single decision maker is required to consider indirect interests in the entity held through those related parties to be the equivalent of direct interests in their entirety. This may result in the single decision maker consolidating a VIE even if it has little to no direct economic interests in the VIE. To address this issue, the FASB recently issued a proposed ASU, Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control.
Source: RSM US LLP
Used with permission as a member of the McGladrey Alliance
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