Essay on Accounting Case 09-3

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CASE 09-3: Venturing into Consolidation Provided Case 09-3, we, Group 7 have dutifully researched the topic, using resources at our disposal to formulate a consistent, clear and legal response. The following submission outlines the case, our conclusions with supporting evidence and the accounting issues present in the subject. FACTS: Case 09-3: Venturing into Consolidation details the ongoings and pertinent information of the joint venture of DeviceCo, and Pharmador branded LeaseMed. The joint venture LeaseMed has been created to operate as a medical equipment leasing entity. The joint venture is overseen by a board of directors composed of six members with three representatives from both parent companies. The joint…show more content…
Variable Interest Entities (VIEs) are addressed in ASC 810-10-15 with a subtopic addressing VIEs. ASC 810-15-17(d) states the criteria to be considered in determining if a VIE qualifies for the business scope exception [1]. These criteria are paraphrased in the latter of this analysis. Per the guidance in ASC 810-15-17(d), in order for DeviceCo or Pharmador to qualify for the business scope exception, LeaseMed must be first deemed a business. ASC 805-10-20 defines a business as “an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return… directly to investors or other owners, members, or participants.” LeaseMed fits this definition in reference to its investors, DeviceCo and Pharmador. ASC 810-15-17(d) also gives four criteria, which the involved parties must not meet, in order to qualify for the business scope exception. The criteria and the analysis corresponding analysis are below: 1. The reporting entity participates in the design or redesign of the VIE. Except in the case of a joint venture in the joint control of the reporting entity and at least one other party. Analysis: Both DeviceCo and Pharmador do not meet this criterion since LeaseMed is a joint venture and is therefore exempt. 2. The VIE conducts business on behalf

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