power to direct significant activities

Broad Transactions1

1. 810-10Overall810 Consolidation

   ASC 810-10 sets out the pervasive framework for determining whether one reporting entity must consolidate another legal entity, and it is organized into three Subsections: General (voting interest model), Variable Interest Entities (VIE model), and Consolidation of Entities Controlled by Contract. Consolidation is required when a reporting entity has a "controlling financial interest" — usually ownership of a majority voting interest (or, for limited partnerships, a majority of kick-out rights through voting interests) under the General Subsections, or, for a VIE, both power over the activities that most significantly impact the VIE's economic performance and exposure to potentially significant losses/benefits. A reporting entity must first test whether the other entity is a VIE (810-10-15-14); only if it is not does the voting-interest or contractual-control analysis apply.