VIE's, Intercompany Debt, and Consolidated Statement of Cash Flows
Post date: Mar 30, 2012 2:22:18 PM
Variable Interest Entities (VIE’s)
ØEstablished as a separate business structure
ØFrequently has neither independent management nor employees
vTransfers of financial assets
vResearch and development
vHedging financial instruments
Intra-Entity Debt Transactions - Debt Acquired from Outside
ØThe acquired debt must be treated as if it has been extinguished.
ØAny related gain or loss related to this “early extinguishment of debt” must be immediately recognized by the consolidated entity.
ØSubsequent payment of principal or interest is treated as a cash transfer.