The variable interest entity (or VIE) model is the starting place for any company thinking through consolidation. 1.1.5 Is the Legal Entity a VIE? Expectancy theory (16/9) (or expectancy theory of motivation) proposes that an individual will behave or act in a certain way because they are motivated to select a specific behavior over others due to what they expect the result of that selected behavior will be. Founded by LA agent, Will Ball, Vie Model & Talent Agency is a better agency. To determine which model applies, an organization must determine whether the entity being evaluated is a VIE or a voting interest entity. If the individual is indifferent, valence will be zero. Under the voting interest model, a controlling financial interest generally is obtained through ownership of a … In essence, the motivation of the behavior selection is determined by the desirability of the outcome. Valence will be positive, when the individual prefers to attain some outcome to not attaining it. Common Control Entities and Consolidating a VIE. In determining whether an entity meets its VIE consolidation guidance, ASC 810-10-25 extends the definition of related parties to include those entities or others acting as “agents or de facto principals” of an equity investor, including a … This publication updates NDS 2010-19, “Variable Interest Entity Analysis,” on applying the variable interest entity (VIE) consolidation model under ASC 810, as amended by ASU 2015-02, Amendments to the Consolidation Analysis, issued in February 2015. It’s a complex model and a frequent area of confusion. The VIE model is an outgrowth of the Enron accounting nightmare that saw that company use an extensive, complex network of unconsolidated special purpose entities to shift debt and losses off its books. Had those entities been consolidated, Enron’s financial statements would have shown the company as the sham it was. The VIE model consists of the following elements: Valence Valence is the strength of an individual's preference for obtaining some particular outcome. This is a two-step evaluation. Downloading the guide onto an iPad. If the entity is a VIE, proceed to Step 4; otherwise, jump to Step 6 (the voting interest model).. Step 4 – Does the company, on its own or together with related parties and de facto agents as a group, have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance?. A variable interest entity (VIE) is a legal entity in which an investor holds a controlling interest, despite not having a majority of its share ownership.A VIE has the following characteristics: The entity's equity is not sufficient to support its operations. 7 1.2 The VIE Model 8 1.3 The Voting Interest Entity Model 9 1.3.1 Limited Partnerships (and Similar Entities) 9 1.3.2 Legal Entities That Are Not Limited Partnerships 9 1.3.3 Control by Contract 9 1.4 Key Differences Between the Voting Interest Entity Model and the VIE Model 10 1.5 Comparison With IFRSs 11 The Portfolio discusses in detail the scope of the VIE consolidation model, the identification of variable interests and the identification of variable interest entities. Hear PwC experts discuss the variable interest entity model and how it fits into the overall consolidation framework. Residual equity holders do not control the VIE Consolidation: A journey through the VIE model. 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