A variable interest entity (VIE) is a structure frequently used for off-balance sheet financing. VIEs have become quite numerous in recent years and have been the subject of some controversy.

Required

a. Briefly explain what is meant by off-balance sheet financing.

b. what are three techniques used to keep debt off the balance sheet?

c. What are some legitimate uses of VIEs?

d. How can VIEs be used to manage earnings to meet financial reporting goals? How does this relate to the importance of following the intent of the guidelines for consolidations?

Answer rating: 100% (QA)

a Offbalance sheet financing Offbalance sheet financing refers to the techniques used by companies t... View the full answer