Codification Master Glossary Essay

chief 1Is the Enterprise a VIE as defined in the Codification Master semblance? If so, what criteria cause it to be deemed a VIE? Assume that (1) the Enterprise does non qualify for any scope exceptions and (2) the righteousness investment by the prospect Sh beholders in the Enterprise represents equity investment at risk. The enterprise is a VIE as defined in the codification of the master glossary. From the narrative, candidate equity holders do not absorb the losses of the enterprise and do not benefit from the repose gain the residual gain quite a goes to the WFOE. The nominee equity holders though they own 100% of the share cannot lam the activities of the enterprise the activities are run by the WFOE as they provide the smart property, employees, resources and other services to run the schools. The nominee shareholders equally pledge their equity rights to the WFOE and cannot transfer, sell or give their equity for encumbrance. This descriptions in the narrative are i n line with the definition of a VIE as per ASC 810-10.Question 2If the Enterprise is deemed to be a VIE, would the WFOE (excluding any related company or de facto agency relationships) unite the Enterprise? The WFOE would consolidate the enterprise pursual ASC 810-10-25-38 because it says a reporting entity shall consolidate a VIE if the reporting entity has a variable interest that absorb a majority of the VIEs expected losses, receives a majority of the VIEs expected residual income or both. The WFOE receives a majority of the enterprise residual income and so should consolidate the enterprise.Question 3What impact, if any, does the POA agreement beat on the terminus r severallyed in Question 2? The POA does not neuter the closure reached in question 2 because the nominee shareholders still act on behalf of the WFOE and the provisions that made the enterprise a VIE does not change with the POA 4. Does the accounting analysis or conclusion change for each of the questions abo ve when analyzed in accordance with IFRS? IFRS does not have VIEs theyhave special purpose entities which are similar to VIEs. According to IAS 27 SPEs should be consolidated where substance of the relationship indicates that the SPE is controlled by the reporting entity. This may draw near even where the activities of the SPE are predetermined or where the majority of the voting or equity are not held by the reporting entity.