VIE vs SPE

[passcfaforsure]

Dear:
If companny A set up a separate entity to issue the stocks backed by the A/R in the balance sheet of comapny A. when this kind of entity is considered SPE or VIE? I read many times, but still not clear about this terms.
Thanks

 

[Allstatsandy]

Hi,
The way I understand it is:
+ VIE is only for US GAAP
+ it depends on the rights of Company A to the profits, losses, voting etc. of the other entity
Check out the examples at the back of the chapter - they answered it for me.

 

[cheual]

Don’t get this mixed up.
VIE is specific for IFRS, sponsoring company has control and consolidates their b/s with the SPV they create.
QSPE is for GAAP and does not have control of the SPV
SPE is either vie or qspe now, post-Enron era

 

[1logic]

cheual wrote:
Don’t get this mixed up.
VIE is specific for IFRS, sponsoring company has control and consolidates their b/s with the SPV they create.
QSPE is for GAAP and does not have control of the SPV
SPE is either vie or qspe now, post-Enron era

I thought post Enron QSPE were no longer allowed and almost all SPE’s had to be consolidated onto the balance sheet? Unless they are completely bankruptcy remote and the company has almost no ties to the profits.

 

[Gyan]

no ur right…post enron QSPE is no longer allowed…VIE is for GAAP nd SPE is for IFRS…but really its d difference of defination..VIE and SPE hve kinda different requiremnts…

 

[ov25]

Does anyone have a quick reminder for what those differences are?

 

[Gyan]

ok let me xplin it better
SPE is a special purpose entity…under GAAP if the SPE meets certain criteria (given below) then it is suppose to be consolidated (as opposed to bfr wen SPEs were off balnce sheet items) nd the SPE is called a VIE if it wud b consolidated.
VIE - co’s equity isint enough to finance the co…OR…the investors/sh holders dont mke any desions OR dont bear the risk OR dont recieve no capital gain…
ok now lets move on to IFRS…IFRS still calls an SPE an SPE, if it meets d criteria for consolidation or not…nd d criteria is - the parent gets the benefits frm the SPE, parent mkes the decions, parent absorbs the risk as well as the reward nd parent has residual intrest in d SPE…
so its just a diff in d name or as i said in their definations…dy practically the same thing, nd yet they’r not…
I really hope that helps whoever is seeing this…