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Example of Substance Over Form: Variable Interest Entity

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An enterprise that holds a variable interest in a variable interest entity (VIE) is required to consolidate the assets, liabilities, revenue, expense, and noncontrolling interest of that entity if: Explain:
A: The Vie has issued no voting stock.
B: The variable interest held by the enterprise involves a lease.
C: The enterprise has a controlling financial interest in the VIE.
D: Other equity interest in the VIE have the obligation to absorb the expected losses of the VIE.

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The solution answers a question about a variable interest entity (VIE).

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C: The enterprise has a controlling financial interest in the VIE.

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