We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
FIN 46R Changes Accounting for Many Structured Finance Deals.
- Authors
Mountain, James R.
- Abstract
Structured finance transactions typically are executed through single-use legal vehicles generically known as "special purpose entities" or "SPEs." The headline-grabbing financial collapses of 2001 made SPEs famous, and the accounting results they were typically used to achieve, infamous. FASB, the U.S. accounting standard setters, responded with a new accounting rule called FIN 46R. FIN 46R became effective in 2004 and was designed specifically to make a substantial change in the accounting landscape for structured transactions. FASB defined "variable interests" as contractual, ownership, or other commercial interests in an entity that change with changes in the fair value of the entity's net assets (excluding variable interests). A "variable interest entity" (VIE) is an entity subject to FIN 46R consohdation rules. A company that is judged to have a majority of the risks and rewards of a VIE is called the "primary beneficiary" and needs to consolidate the VIE for financial statement purposes.
- Subjects
FINANCE; ACCOUNTING; ACCOUNTING standards; VARIABLE interest rates; FAIR value
- Publication
Journal of Structured Finance, 2004, Vol 10, Issue 3, p29
- ISSN
1551-9783
- Publication type
Article
- DOI
10.3905/jsf.2004.443353