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


vJoint Venture



ØFrequently has neither independent management nor employees

ØTypical purposes

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.