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FASB Updates Accounting for Consolidation of Variable Interest Entities

November 1, 2018

The Financial Accounting Standards Board (FASB) released an accounting standards update (PDF) for the consolidation of variable interest entities (VIE), aiming to reduce the cost and complexity of accounting for them, especially for private companies, by expanding an alternative that's been available to them in recent years. VIE are organizations in which consolidation isn’t based on a majority of voting rights. The update came after input from FASB’s sister organization, the Private Company Council, and supersedes an earlier alternative for privately held companies that was issued in 2014, expanding from common control leasing arrangements to all qualifying common control arrangements.