What do we need to know that distinguishes these two entities?
Conditions for Consolidating a VIE§ An SPE is considered a VIE if any of the following conditions are met: §Insufficient at-risk investment (typically less than 10%) §Shareholders lack decision-making rights §Shareholders do not absorb expected losses §Shareholders do not receive expected residual returns
Qualifying SPE§U.S. GAAP only §Avoids consolidation §QSPE must: §Independent and legal separate from sponsor §Total control over asset §May only hold financial assets §Sponsor must have limited financial risk §Issue = judgement required