No — a wholly owned subsidiary is not a variable interest entity (VIE) by default. A wholly owned subsidiary where the parent holds 100% of the voting equity, the equity is sufficient to finance operations, and equity holders bear the risks and rewards is consolidated under the voting interest entity model, not the VIE model. The two concepts serve different purposes under ASC 810 consolidation rules, and confusing them leads to serious accounting and legal mistakes.
The Financial Accounting Standards Board (FASB) created the VIE framework after the Enron scandal exposed how companies hid billions in debt inside off-balance-sheet entities. According to the SEC, Enron used over 3,000 special purpose entities to keep roughly $25 billion in debt off its books before its collapse. A wholly owned subsidiary can become a VIE under specific conditions — but ownership alone does not make that determination.
Here is what you will learn in this article:
- 🔍 The exact legal and accounting differences between a wholly owned subsidiary and a VIE under U.S. GAAP
- ⚖️ How ASC 810 forces companies to choose between the voting interest model and the VIE model — and why it matters
- 🏢 Three real-world scenarios showing when a wholly owned subsidiary crosses into VIE territory
- 🚫 The most common mistakes businesses make when classifying entities — and the penalties that follow
- ✅ Actionable do’s and don’ts to keep your entity classification clean and audit-ready
What Is a Wholly Owned Subsidiary Under U.S. Law?
A wholly owned subsidiary is a company where a single parent entity holds 100% of the outstanding voting stock. The parent has complete control over the subsidiary’s board of directors, operations, and financial decisions. This structure is one of the most common in corporate America, used by companies ranging from small businesses to Fortune 500 corporations.
Under state corporate law — particularly in Delaware, where over 60% of Fortune 500 companies incorporate — the parent forms the subsidiary as a separate legal entity. The subsidiary has its own articles of incorporation, its own employer identification number (EIN), and its own legal obligations. Despite this legal separation, the parent treats the subsidiary as part of a single economic unit for financial reporting purposes.
The key characteristic of a wholly owned subsidiary is that control comes from voting stock ownership. The parent owns every single share, so it elects the entire board, approves all major decisions, and directs every significant activity. There are no minority shareholders, no outside investors splitting control, and no complex contractual arrangements needed to establish who is in charge.
This straightforward ownership structure means the subsidiary almost always falls under the voting interest entity (VOE) model in ASC 810. The parent consolidates the subsidiary by combining all assets, liabilities, revenues, and expenses line by line into one set of financial statements. The parent’s investment account is eliminated against the subsidiary’s equity to avoid double-counting.
What Exactly Is a Variable Interest Entity?
A variable interest entity is a legal structure where the controlling party gains control through something other than majority voting rights. The concept was born out of the FASB’s response to Enron and similar corporate fraud scandals in the early 2000s. FASB issued FIN 46 in January 2003, later revised as FIN 46(R), to close the loopholes companies exploited to keep risky entities off their balance sheets.
Under ASC 810’s VIE framework, a legal entity qualifies as a VIE if it meets any one of three conditions. First, the entity’s equity investment at risk is not sufficient to finance its activities without additional subordinated financial support. Second, the equity holders as a group lack the power to direct the activities that most significantly affect the entity’s economic performance. Third, the equity holders do not bear the obligation to absorb expected losses or receive expected residual returns.
The party that must consolidate a VIE is called the primary beneficiary. The primary beneficiary is the single entity that holds both the power to direct the VIE’s most significant activities and the obligation or right to absorb losses or receive benefits that could be significant. Both elements — power and economics — must be present for primary beneficiary status.
This framework captures entities that traditional voting-interest rules miss. Think of a special purpose entity (SPE) where the equity investor puts in just 3% of the capital, a bank provides a 97% guarantee, and the equity investor has no real say in operations. Under voting rules alone, the tiny equity investor would “control” this entity. Under the VIE model, the bank — bearing almost all the risk — is identified as the primary beneficiary and must consolidate.
The Enron Scandal That Changed Everything
Before 2001, U.S. GAAP relied almost entirely on voting interests to determine consolidation. Enron Corporation exploited this by creating thousands of special purpose entities that it controlled through contracts, guarantees, and management agreements — not through voting stock. Because Enron did not own a majority of the voting shares in these SPEs, it kept their assets and massive debts off its financial statements.
When Enron collapsed in December 2001, investors and creditors discovered that the company’s actual debt was billions more than reported. The market lost confidence, and Enron’s shareholders lost everything. Congress responded with the Sarbanes-Oxley Act of 2002, and FASB fast-tracked a new accounting standard to prevent this kind of manipulation.
FASB issued FIN 46 in January 2003, and it fundamentally changed consolidation accounting. The original focus was on special purpose entities like those Enron used, but FASB broadened the scope to cover any entity where variable interests exist. This interpretation introduced the concept of the “primary beneficiary” and required consolidation based on economic substance rather than legal form.
FIN 46(R), the revised version issued in December 2003, refined the original rules and is now codified in ASC 810-10. The VIE model did not replace the voting interest model — it added a second layer of analysis. Every entity must first be evaluated under the VIE model, and only if it does not qualify as a VIE does the voting interest model apply.
How ASC 810 Forces You to Choose a Model
ASC 810 does not let companies pick which consolidation model they prefer. The standard prescribes a specific sequence of analysis that every reporting entity must follow. Getting this sequence wrong is one of the most common audit findings in consolidation accounting.
The process works like this: the reporting entity first determines whether the entity being evaluated is a legal entity. Next, it checks whether any scope exceptions in ASC 810 apply — certain entities like employee benefit plans, registered investment companies, and some governmental organizations are exempt. If no scope exception applies, the reporting entity identifies whether it holds a variable interest in the legal entity.
A variable interest is any contractual, ownership, or other financial interest that changes with changes in the fair value of the entity’s net assets. Common stock is the simplest example. Debt guarantees, subordinated loans, certain leases, and derivative contracts can also qualify as variable interests. If a variable interest exists, the reporting entity must assess whether the legal entity is a VIE.
If the entity is a VIE, the reporting entity applies the VIE model to determine whether it is the primary beneficiary. If the entity is not a VIE, the reporting entity applies the voting interest model. This sequence matters because the two models define “control” differently — and different definitions produce different consolidation outcomes for identical ownership structures.
VIE Model vs. Voting Interest Model: Side by Side
Understanding the differences between these two models is critical for proper entity classification. The key distinctions under ASC 810 affect how control is measured, who must consolidate, and what disclosures are required.
| Feature | Voting Interest Model |
|---|---|
| How control is defined | Ownership of more than 50% of voting stock |
| Feature | VIE Model |
|---|---|
| How control is defined | Power over significant activities plus obligation to absorb losses or right to receive benefits |
| Feature | Voting Interest Model |
|---|---|
| Who consolidates | The majority voting interest holder |
| Feature | VIE Model |
|---|---|
| Who consolidates | The primary beneficiary |
| Feature | Voting Interest Model |
|---|---|
| Type of power required | Absolute power over all significant financial and operating decisions |
| Feature | VIE Model |
|---|---|
| Type of power required | Relative power over the activities that most significantly affect economic performance |
| Feature | Voting Interest Model |
|---|---|
| Related party impact | Not considered in the analysis |
| Feature | VIE Model |
|---|---|
| Related party impact | Related parties and de facto agents must be evaluated |
| Feature | Voting Interest Model |
|---|---|
| Disclosure requirements | Limited disclosures for consolidated subsidiaries |
| Feature | VIE Model |
|---|---|
| Disclosure requirements | Extensive disclosures required for both consolidated and unconsolidated VIEs |
The VIE model requires only relative power, meaning the entity that directs the most important activities consolidates. The voting interest model requires absolute power, meaning the majority owner must control all significant decisions. Because relative power is easier to demonstrate, the VIE model results in consolidation more often than the voting interest model.
When a Wholly Owned Subsidiary Becomes a VIE
A wholly owned subsidiary can qualify as a VIE if it meets any of the three VIE conditions — even with 100% ownership. Ownership percentage alone does not determine the model. The analysis focuses on the characteristics of the equity at risk and the rights of the equity holders.
Scenario 1: The Undercapitalized Subsidiary
A parent company forms a wholly owned subsidiary to develop a commercial real estate project. The parent contributes $500,000 in equity, but the project requires $15 million. The subsidiary finances the gap through a bank loan guaranteed by the parent. The subsidiary’s equity at risk — $500,000 — is not sufficient to finance its activities without the parent’s guarantee.
| Entity Characteristic | Classification Result |
|---|---|
| Parent owns 100% of voting stock | Meets wholly owned subsidiary definition |
| Equity at risk ($500K) cannot finance $15M project | Meets VIE condition — insufficient equity at risk |
| Parent guarantees subsidiary’s debt | Parent is likely primary beneficiary |
| Final classification | Wholly owned subsidiary AND a VIE |
This subsidiary is both a wholly owned subsidiary and a VIE. The parent must consolidate under the VIE model, not the voting interest model. The parent must also provide the extensive VIE disclosures required by ASC 810, including the nature, purpose, and size of the VIE, the carrying amounts of assets and liabilities, and its maximum exposure to loss.
Scenario 2: The Subsidiary With Non-Substantive Voting Rights
A technology company creates a wholly owned subsidiary to hold intellectual property (IP) licenses. The subsidiary’s charter gives the parent all voting rights, but a separate management agreement grants an unrelated third-party manager the exclusive right to direct how the IP is licensed, priced, and distributed. The parent’s voting rights are non-substantive because they do not translate into actual power over the subsidiary’s most significant activities.
| Entity Characteristic | Classification Result |
|---|---|
| Parent holds 100% voting stock | Meets wholly owned subsidiary definition |
| Third-party manager directs all significant IP activities | Equity holders lack power over significant activities |
| Parent receives fixed management fee, not residual returns | Equity holders may not absorb losses or receive residual returns |
| Final classification | Wholly owned subsidiary AND a VIE |
The third-party manager — not the parent — may be the primary beneficiary if it also absorbs significant economic risks or rewards. This scenario shows how contractual arrangements can override legal ownership in determining entity classification under ASC 810.
Scenario 3: Disproportionate Voting Rights in a Joint Structure
A parent company sets up a wholly owned subsidiary but contributes only 5% of the subsidiary’s total capital. The remaining 95% comes from a silent investor through a subordinated loan. The subsidiary’s charter gives the parent 100% of the votes, but the silent investor absorbs 95% of the losses and receives 95% of the returns.
| Entity Characteristic | Classification Result |
|---|---|
| Parent owns 100% of voting stock with 5% of capital | Meets wholly owned subsidiary definition |
| Voting rights are disproportionate to economic exposure | VIE condition met — disproportionate voting rights |
| Silent investor absorbs 95% of losses and returns | Silent investor may be primary beneficiary |
| Final classification | Wholly owned subsidiary AND a VIE |
Under ASC 810, when voting rights are not proportionate to the economic interests, and substantially all activities are conducted on behalf of the party with disproportionately few voting rights, the entity is a VIE. The parent owns 100% of the votes but bears almost none of the risk — so the VIE model governs.
Real-World Examples: Where This Plays Out
Example 1: The Real Estate Holding Company
Maria forms a wholly owned LLC to purchase an apartment building. She contributes $200,000 in equity and takes out a $2 million mortgage. The bank requires Maria to personally guarantee the loan. Maria’s LLC is likely a VIE because the equity at risk ($200,000) is insufficient to finance the $2.2 million needed for the property. Maria, as the guarantor with the power to direct all property management decisions, is the primary beneficiary.
If Maria’s accountant classifies this LLC only as a standard subsidiary under the voting model, the financial statements miss the required VIE disclosures. An auditor will flag this as a material misstatement, and the financial statements will need to be restated.
Example 2: The Tech Startup Shell Entity
A software company creates a wholly owned subsidiary to hold a patent portfolio. The subsidiary has $10,000 in equity and no employees. A licensing firm manages all the patents under an exclusive agreement, collecting royalties and deciding which companies to license to. The subsidiary exists on paper, but the licensing firm runs everything.
This subsidiary qualifies as a VIE because its equity is insufficient and its equity holder (the parent) does not direct the activities that most significantly affect performance. The licensing firm may be the primary beneficiary if it absorbs significant losses or receives significant benefits.
Example 3: The Overseas Manufacturing Subsidiary
A U.S. parent owns 100% of a manufacturing subsidiary in Vietnam. The subsidiary has $5 million in equity, employs 500 workers, operates its own factory, and the parent’s board directs all major operating and financial decisions. The equity is sufficient to fund operations, and the equity holder (the parent) has full power, absorbs losses, and receives returns.
This subsidiary is not a VIE. It meets all the criteria for consolidation under the voting interest model. The parent consolidates it the traditional way — line-by-line aggregation with intercompany eliminations. No additional VIE disclosures are required.
The Three VIE Conditions Every Business Must Test
Every legal entity — including every wholly owned subsidiary — must be tested against these conditions before the reporting entity can determine which consolidation model to use. Failing any one of these three tests makes the entity a VIE.
Condition 1: Insufficient Equity at Risk
The entity’s total equity investment at risk must be enough to finance its activities without additional subordinated financial support from other parties. “Equity at risk” means equity that participates in both the losses and the residual returns of the entity. If the equity holders need guarantees, subordinated loans, or other support to keep the entity running, the equity is insufficient.
A common rule of thumb is that equity at risk below 10% of total assets raises a red flag. But this is not a bright-line test — it requires judgment based on the entity’s specific activities and risk profile.
Condition 2: Equity Holders Lack Control Characteristics
Even if the equity is sufficient, the entity is a VIE if the equity holders as a group lack any one of three characteristics. They must have the power to direct the entity’s most significant activities. They must have the obligation to absorb the entity’s expected losses. They must have the right to receive the entity’s expected residual returns.
If a management contract, service agreement, or other arrangement strips the equity holders of decision-making power over the activities that drive economic performance, this condition is met. The equity holders might own the entity on paper, but someone else calls the shots.
Condition 3: Disproportionate Voting Rights
An entity is a VIE if its voting rights are not proportionate to its economic interests, and substantially all of the entity’s activities are conducted on behalf of the investor with disproportionately few voting rights. This condition targets structures designed to give one party control without economic exposure.
For example, if one party holds 90% of the votes but only 2% of the economic interest, and the entity operates primarily for the benefit of a party holding 98% of the economic interest but only 10% of the votes, this entity is a VIE.
Mistakes to Avoid When Classifying Entities
Getting entity classification wrong under ASC 810 triggers audit deficiencies, financial restatements, and potential SEC enforcement actions. These are the most common errors and their consequences.
Mistake 1: Assuming 100% Ownership Means It Cannot Be a VIE
Many business owners and even some accountants believe that a wholly owned subsidiary is automatically excluded from VIE treatment. This is false. ASC 810 requires VIE analysis for all legal entities regardless of ownership percentage. Skipping the VIE assessment means the entity might be consolidated under the wrong model, resulting in missing disclosures and potential misstatements.
Mistake 2: Skipping the Sequence of Analysis
Some reporting entities jump straight to the voting interest model without first evaluating whether the entity is a VIE. ASC 810 requires the VIE assessment to come first. If a scope exception does not apply and a variable interest exists, the entity must be tested as a potential VIE before the voting interest model can be considered.
Mistake 3: Ignoring Implicit Variable Interests
Variable interests are not limited to equity ownership. Debt guarantees, subordinated loans, certain operating leases, and even service contracts can create variable interests. Reporting entities that focus only on stock ownership and ignore these other arrangements may fail to identify a VIE that requires consolidation.
Mistake 4: Failing to Reassess VIE Status
VIE status is not a one-time determination. ASC 810 requires ongoing reassessment whenever events change the entity’s structure, governance, or financing. A subsidiary that starts as a voting interest entity can become a VIE if it takes on guaranteed debt or transfers decision-making power to a third party. Failure to reassess leads to stale classifications and inaccurate financial statements.
Mistake 5: Confusing Legal Control With Economic Control
Legal ownership of 100% of the voting stock does not always equal economic control under the VIE model. If contractual arrangements give a third party power over the entity’s most significant activities, the legal owner may not be the primary beneficiary. This disconnect between legal and economic control is exactly what the VIE framework was designed to capture.
Do’s and Don’ts for Entity Classification
Do’s:
- Do perform the VIE analysis before the voting interest analysis — ASC 810 requires this sequence for every legal entity, including wholly owned subsidiaries
- Do evaluate all variable interests, not just equity — guarantees, subordinated debt, certain leases, and service agreements count as variable interests
- Do document your analysis in writing — auditors need to see the judgment calls you made and the evidence supporting your classification
- Do reassess VIE status when significant events occur — changes in financing, governance, or contractual rights can shift an entity from VOE to VIE
- Do consult ASC 810-10-15 for scope exceptions — certain entities like employee benefit plans and registered investment companies are exempt from VIE analysis
Don’ts:
- Don’t assume 100% ownership eliminates VIE risk — a wholly owned subsidiary can still be a VIE if it has insufficient equity or if the equity holder lacks control characteristics
- Don’t skip the equity sufficiency test — this is the most common trigger for VIE classification, especially in real estate and project finance structures
- Don’t ignore related-party relationships — the VIE model requires evaluation of related parties and de facto agents, which can change who must consolidate
- Don’t rely on legal form over economic substance — the entire VIE framework exists because legal form failed to capture real economic control after Enron
- Don’t forget VIE disclosures — even if you are not the primary beneficiary, holding a significant variable interest triggers mandatory disclosure requirements
Pros and Cons of VIE Classification
| Pros of VIE Classification | Cons of VIE Classification |
|---|---|
| Transparency — forces companies to consolidate entities they truly control, giving investors a more accurate picture of risk | Complexity — the VIE analysis requires significant judgment calls that are harder to make than simple voting-interest tests |
| Fraud prevention — closes the loopholes Enron exploited, preventing companies from hiding debt in unconsolidated entities | Cost — ongoing reassessment, documentation, and additional disclosures increase accounting and audit costs |
| Investor protection — extensive disclosure requirements help investors understand off-balance-sheet risks | Subjectivity — the “most significant activities” and “sufficient equity” tests involve judgment that different auditors may interpret differently |
| Economic substance — captures control based on who actually bears risk and makes decisions, not just who holds voting stock | Consolidation surprises — an entity might need to consolidate a VIE it did not expect to, adding assets and liabilities to its balance sheet |
| Flexibility — applies to a wide range of structures including SPEs, joint ventures, and partnerships that voting rules miss | Ongoing burden — continuous reassessment requirements mean the analysis is never “done” — it must be updated for every significant event |
Key Entities and Their Roles in VIE Analysis
Several organizations and standards interact in the VIE framework. Understanding who does what helps you navigate entity classification.
The Financial Accounting Standards Board (FASB) creates and maintains the accounting standards, including ASC 810, that govern consolidation in the United States. FASB issued FIN 46 and FIN 46(R) in response to the Enron scandal and continues to evaluate whether a single consolidation model should replace the current two-model system. In January 2025, FASB issued an invitation to comment on whether stakeholders support unifying the VIE and voting interest models.
The Securities and Exchange Commission (SEC) enforces compliance with GAAP for publicly traded companies. If a public company fails to properly classify an entity as a VIE or misses required disclosures, the SEC can require restatement of financial statements and impose penalties.
ASC 810-10 is the specific section of the FASB Accounting Standards Codification that houses all the consolidation rules. It contains the VIE model, the voting interest model, scope exceptions, disclosure requirements, and guidance on intercompany eliminations.
The primary beneficiary is the party that consolidates the VIE. The reporting entity is the company performing the analysis. These may or may not be the same party, depending on who holds power and economic exposure.
State-Level Nuances That Affect Subsidiary Structure
While ASC 810 is a federal accounting standard that applies uniformly across the United States, state corporate law governs how subsidiaries are formed, operated, and dissolved. The state of incorporation affects the legal flexibility a parent has in structuring a subsidiary.
Delaware remains the dominant choice for incorporation because its General Corporation Law offers extensive flexibility in structuring governance arrangements. Delaware allows companies to create entities with highly customized voting rights, management agreements, and capital structures. These customizations are precisely the kind of arrangements that can trigger VIE classification under ASC 810.
Nevada attracts businesses with its strong liability protections and no state corporate income tax. However, a Nevada LLC structured with minimal equity and a third-party manager directing operations faces the same VIE analysis as any other entity. State tax benefits do not affect the federal accounting classification.
Wyoming is popular for holding companies and asset protection structures. The state’s flexible LLC statutes allow creative management and ownership arrangements. But the more creative the structure, the more likely it triggers VIE conditions — especially the disproportionate voting rights test and the equity sufficiency test.
The Consolidation Process: Step by Step
Once you determine the correct model, the consolidation process follows specific steps. Whether you consolidate under the VIE model or the voting interest model, the mechanics of combining financial statements are similar.
Step 1: Combine Financial Statements Line by Line. Add the parent’s and subsidiary’s assets, liabilities, revenues, and expenses together. Every line item on the income statement and balance sheet gets combined.
Step 2: Eliminate the Parent’s Investment Account. The parent’s “Investment in Subsidiary” account is removed from the consolidated balance sheet. It is offset against the subsidiary’s equity accounts (common stock, retained earnings). This prevents double-counting.
Step 3: Eliminate All Intercompany Balances. Any receivables and payables between the parent and subsidiary must be removed. Leaving them in would inflate the consolidated balance sheet.
Step 4: Eliminate Intercompany Profits. If the parent sold inventory to the subsidiary at a markup, and the subsidiary has not yet sold that inventory to an outside customer, the unrealized profit must be removed. The same applies to fixed asset transfers.
Step 5: Record Non-Controlling Interest (if applicable). For wholly owned subsidiaries, there is no non-controlling interest. But if the entity is a VIE consolidated by a primary beneficiary that does not own 100%, the non-controlling interest must be presented separately in equity and on the income statement.
Step 6 (VIE only): Provide Required Disclosures. If the entity is a VIE, the primary beneficiary must disclose the nature, purpose, and size of the VIE; the carrying amounts and classifications of the VIE’s assets and liabilities; and the maximum exposure to loss.
Court Rulings and Regulatory Precedents
Several landmark cases and regulatory actions shaped how VIEs and subsidiaries are treated under U.S. law and accounting standards.
The Enron bankruptcy (2001) was the catalyst for FIN 46. The court proceedings revealed that Enron’s officers used SPEs to inflate earnings and hide debt. The resulting FASB interpretation fundamentally changed how off-balance-sheet entities are evaluated.
The SEC’s enforcement actions against Enron’s auditor, Arthur Andersen, demonstrated that auditors who fail to identify consolidation requirements face criminal and civil liability. Arthur Andersen was convicted of obstruction of justice in 2002, and the firm dissolved — a direct consequence of failing to ensure proper accounting for entities that should have been consolidated.
In 2009, FASB issued Statement 167, which amended the VIE model to eliminate the concept of a “qualifying special purpose entity” (QSPE) — a carve-out that many financial institutions used to keep mortgage-backed securities off their balance sheets. This change, triggered by the 2008 financial crisis, forced banks to bring trillions of dollars in assets back onto their consolidated balance sheets.
The FASB’s ongoing research project as of 2025 explores whether a single consolidation model should replace the current two-model system. Stakeholders have expressed mixed views on whether unification would simplify or further complicate the analysis.
FAQs
Can a wholly owned subsidiary be a VIE?
Yes. A wholly owned subsidiary becomes a VIE if its equity at risk is insufficient, its equity holders lack control characteristics, or its voting rights are disproportionate to economic interests under ASC 810.
Does 100% ownership prevent VIE classification?
No. Ownership percentage does not determine VIE status. ASC 810 evaluates the sufficiency of equity, the power of equity holders, and the proportionality of voting rights to economic exposure.
Is every VIE an off-balance-sheet entity?
No. A VIE must be consolidated by its primary beneficiary. Once consolidated, its assets and liabilities appear on the primary beneficiary’s balance sheet, not off it.
Do private companies follow the same VIE rules?
Yes. ASC 810 applies to all entities that follow U.S. GAAP, whether public or private. Private companies may elect certain practical expedients but cannot skip the VIE analysis.
Does the VIE model replace the voting interest model?
No. Both models exist under ASC 810. The VIE model is evaluated first, and the voting interest model applies only if the entity does not qualify as a VIE.
Can VIE status change over time?
Yes. ASC 810 requires continuous reassessment. Changes in financing, governance, or contractual arrangements can cause an entity to gain or lose VIE status.
What happens if I consolidate under the wrong model?
Yes, there are consequences. Consolidating under the wrong model results in missing VIE disclosures, potential financial restatements, and audit deficiencies that may trigger SEC scrutiny.
Is a joint venture a VIE?
Yes, in many cases. Joint ventures where one partner lacks sufficient equity or does not share proportionate control often meet VIE conditions under ASC 810.
Can a nonprofit be a VIE?
Yes. Nonprofit entities that receive subordinated financial support or where outside parties direct significant activities can qualify as VIEs under ASC 810’s framework.
Does VIE classification affect taxes?
No, not directly. VIE classification is an accounting and financial reporting concept under GAAP. Tax consolidation follows separate IRS rules under the Internal Revenue Code.
Related reading
- Should Investment in Subsidiary Be Revalued? (w/Examples) + FAQs
- What Is a Variable Interest Entity? (w/Examples) + FAQs
- Can a Parent Company Be a Variable Interest Entity? (w/Examples) + FAQs
- How to Determine Variable Interest Entity (w/Examples) + FAQs
- What Qualifies as a Variable Interest Entity? (w/Examples) + FAQs
- Do Debt Holders Have Ownership Interest? (w/Examples) + FAQs
- Can a C Corporation Be a Shareholder in an S Corp? (w/Examples) + FAQs