Master of the Universe

610 Words3 Pages
Master of the Universe For the purpose of owning and operating an organic clothing design store, the company Jupiter was created. Jupiter was formed by Saturn, which owns 51% of Jupiter, with Venus owning the remaining 49%. Both Saturn and Venus participate in managing Jupiter, with each absorbing potential losses as well as the profits in proportion to their respective ownership interest percentages. ACS 810102521, 22, discuss the variability to be considered in applying the VIE (the Variable Interest Entity accounting considerations) in the noted Subsections as well as analysis of the design of the legal entity in two steps. Step 1 provides analysis of the risk to the legal entity. Step 2 requires determination of the purpose…show more content…
The power to control the activities of the VIE that effect the overall performance of that entity. 2. The obligation to absorb losses of the entity and the right to receive profits from the entity that could be significant to the VIE. The articles of Jupiter states that the board operates the daily activities of Jupiter, bears the responsibility to authorize decisions, to appoint the CEO or remove him, makes calls for the capital contributions, and, authorize admission for new joint venture members. Mergers and acquisitions are permitted by eight directors, four from each company. Both companies share profits and losses of Jupiter according to their ownership percentage in Jupiter. As a result, both, Saturn and Venus qualify as a VIE. According to ASC 810102538A, the primary beneficiary of a VIE that has both of the following characteristics: 1. Power to direct activities that could significantly affect the economic performance of the VIE. 2. The obligation to absorb losses and the right to benefits that could be significant to the VIE. According to Statement NO.167, paragraph 14A, no more than one entity is expected to be the primary beneficiary of variable interest entity. More than one entity could have the characteristics to be the primary beneficiary, but only one has the power to direct activities of VIE that most significantly impact the economic performance of the VIE. Saturn controls all decisions regarding
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