This free, guided checker walks your finance team through the key decision points for ASC 810 Variable Interest Entity Consolidation. Answer a few questions to see the likely treatment and the evidence to document.
Answer a few quick questions below. It is private - nothing is submitted or stored - and takes about a minute.
This tool is a high-level US GAAP screening aid for general information only and is not accounting, audit or legal advice. Conclusions require entity-specific evidence and judgement - confirm the treatment with your advisor.
Here is what the checker asks and why each step matters. Prefer to talk it through? Contact us and we will help directly.
A variable interest changes in value with changes in the fair value of the entity's net assets exclusive of variable interests - equity, debt, guarantees, written puts and some fee arrangements can all qualify.
Without a variable interest, the VIE consolidation model does not apply to this entity.
Official guidance: FASB Accounting Standards Codification
Screen for the scope exceptions in ASC 810-10-15-17 before running the VIE model - these cover not-for-profits not used to circumvent the guidance, certain employee benefit plans, registered and qualifying investment companies, governmental organizations, and legal entities that meet the business scope exception. Separately, a private company may make an accounting policy election under ASC 810-10-15-17AD (added by ASU 2018-17) not to apply the VIE guidance to a legal entity under common control that meets the criteria; the election applies to all qualifying common-control arrangements and carries its own disclosures. Skipping this screen and running the full VIE analysis on an entity that is out of scope is a common and costly misstep.
A scope exception in ASC 810-10-15-17 applies, so the reporting entity does not apply the VIE consolidation model to this entity. Under the private-company accounting alternative the reporting entity does not apply the VIE guidance to the common-control entity but provides the alternative's disclosures (ASC 810-10-15-17AD; ASU 2018-17). No scope exception applies and no alternative is elected; evaluate whether the legal entity is a VIE (ASC 810-10-15-14).
Official guidance: FASB Accounting Standards Codification
Test the ASC 810-10-15-14 conditions: sufficiency of equity at risk, decision-making rights held through equity, obligation to absorb losses, right to residual returns, and disproportionate voting rights.
The entity is a voting interest entity; apply the voting interest consolidation model instead of the VIE model.
Official guidance: FASB Accounting Standards Codification
Identify the activities that most significantly impact economic performance first - for example asset selection, servicing or portfolio management - then determine who directs them. Related-party and de facto agent rules can affect the analysis.
The reporting entity does not individually hold power; test whether a related-party or de facto agent group collectively holds power before concluding (ASC 810-10-25-44).
Official guidance: FASB Accounting Standards Codification
The tiebreaker in ASC 810-10-25-44 applies when a single decision maker and its related parties or de facto agents as a group have both power over the most significant activities and potentially significant economics, but no single party is the primary beneficiary on its own. De facto agent relationships are defined in ASC 810-10-25-43. If the group does not collectively hold power and economics, do not apply the tiebreaker; the reporting entity simply is not the primary beneficiary.
Apply the tiebreaker in ASC 810-10-25-44 to identify the single party within the related-party group that is most closely associated with the VIE and consolidates. No member of the reporting entity's related-party group holds power and economics, so the reporting entity is not the primary beneficiary and discloses under ASC 810-10-50-4.
Official guidance: FASB Accounting Standards Codification
The threshold is 'potentially significant' - a lower bar than probable or expected - assessed against the VIE's total variability.
Both primary-beneficiary criteria are met, so the reporting entity consolidates the VIE. Without potentially significant economics, the reporting entity is not the primary beneficiary and does not consolidate.
Official guidance: FASB Accounting Standards Codification
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