Variable Interest Annuities

Variable Interest Annuities (VIE’s) have gained wide attention due to the company Enron. Based on this weeks reading and weekly lecture:

Explain what VIE’s are and what part did VIE’s play in the collapse of Enron?

Does the Walt Disney Company have any VIE’s? Who are they, where are they located and how does the company account for the VIE’s?

Review the following company VIE’s and comment on the accounting application of the entity:

oGeneral Electric

oConAgra Foods

oTime Warner

oAllegheny Energy

Part 2

Explain the concept of non-controlling interest.

Research examples from corporate financial statements and notes and provide specific examples of non-controlling interest.

Requirements: 2 Pages

Answer preview

General Electric has numerous subsidiaries, including GE Aviation, GE Healthcare, DE addictive, and others. The Company consolidates its income, losses, and assets on its financial statements. Time Warner is a US Company that is owned by AT&T. The Company has various subsidiaries, including Warner Bros, HBO, and Pictures. The Company’s revenues, losses, assets, and obligations are consolidated in AT&T’s financial information. Allegheny Energy is a USD company that offers electric services in some parts of the USA. The Company merged with FirstEnergy company in 2010. ConAgra Foods specializes in packaging food products, and it is headquartered in Chicago, Illinois. It has various VIEs, including Pinnacle Food, ConAgra Food Lamb Weston, KAG Tech, Bernoulli, and others. Its subsidiaries’ income and losses are consolidated in its financial income.

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Variable Interest Annuities