Date: March 17, 2013
Subject: Florabama Variable Interest Analysis
The purpose of this memo is to analyze the Florabama energy venture that Meyer Inc. initiated with Saban Company in February 2011. Meyer Inc. owns 60 percent of Florabama, and Saban Co. owns the remaining 40 percent. The profits are shared according to ownership percentage. The arrangement allows Saban Co. to purchase up to 20 percent of the power produced by Florabama at cost plus. Due to the business nature and level of equity investment at risk, Florabama has been deemed a Variable Interest Entity (VIE) for financial reporting purposes. This memo will analyze the primary purpose and design of Florabama to determine whether Meyer Inc. or Saban Co. meet the criteria to be treated as variable interest holders, and whether either entity should be considered the primary beneficiary.
A variable interest holder is an entity that owns investments or other interests that will absorb portions of a VIE's expected losses or receive expected residual returns (Grant Thornton LLP, n.d.). Both Meyer Inc and Saban Co. meet the criteria to be considered variable interest holders. Meyers Inc. absorbs 60 percent of the profits and losses of the VIE, while Saban Co. absorbs 40 percent of the profits and losses of Florabama and maintains a cost-plus arrangement. The cost plus arrangement is a variable interest, which allows Saban Co. to receive low cost financing on power and energy. Meyer Inc. has the obligation to absorb losses or receive gains as well as the power to direct the economic activities of Florabama. The economic and controlling interest of Florabama by Meyer Inc. meet the primary beneficiary standards, which require fin...
... middle of paper ...
FASB (Financial Accounting Standards Board). (n.d.) ACS 810-10-50-3. Retrieved March 10, 2014, from FASB Accounting Standards Codification database.
FASB (Financial Accounting Standards Board). (n.d.) 810-10-50-4. Retrieved March 10, 2014, from FASB Accounting Standards Codification database.
FASB (Financial Accounting Standards Board). (n.d.) 810-10-25-55. Retrieved March 10, 2014, from FASB Accounting Standards Codification database.
FASB (Financial Accounting Standards Board). (n.d.) ASC 810-10-15-14(a). Retrieved March 10, 2014, from FASB Accounting Standards Codification database.
Grant Thornton LLP. (n.d.). Variable interest entity accounting considerations:. Retrieved from Grant Thornton LLP Web site: http://www.grantthornton.com/staticfiles/GTCom/Audit/Assurancepublications/Updates%20at%20a%20Glance/vie_snapshot%20%20external%20FINAL.pdf
Need Writing Help?
Get feedback on grammar, clarity, concision and logic instantly.Check your paper »
- The first book in the Twilight saga as said by the author in the Amazon interview is about finding true love and is conveniently entitled Twilight. Stephenie Meyer was partial to calling it Forks, the name of the little town Bella goes to live. Her name was chosen because Stephenie Meyer would have named her daughter that if she had one. It fit so nicely with Edward. Bella's full name is Isabella Swan. Isabella goes to live in Forks, a little town that really does exist on the map on the Olympic Peninsula in Washington State.... [tags: Twilight, Stephenie Meyer,]
568 words (1.6 pages)
- The new sensation sweeping America these days is a series of books written by Stephanie Meyer. The series takes readers to a place where the old world and myths about vampires and werewolves are looked at completely different. The idea of werewolves being killed by silver bullets and vampires dying of holy water is simply not even thought of. As the series turns into major movies and vampire Edward is given competition by Jacob the infamous werewolf. Many people began choosing sides of whom they favored winning Bella’s heart.... [tags: Stephanie Meyer, characters,]
553 words (1.6 pages)
- Professor McKelvie, I am addressing this memo to you in regards to our recent proposal we have presented in class. Group one had presented the concept of turning our current class into a strictly an online class by using the Wimba/Blackboard Collaborate that UMSL currently has already purchased. During the brainstorming part of the assignment I strongly believe that everyone did put forth their ideas on what we should as a group present to the class. With some of the people in our group having prior knowledge in using the Wimba/Blackboard Collaborate classrooms in classes previous to this one we all agreed that this class could very easily be turned into an online class since it is already a... [tags: Proposal, Proposals, English-language films]
722 words (2.1 pages)
- Risk and Return Trade off Memo To: Rainier Ekstrom From: Subject: Investment Strategy and Performance The company provided me with eight different stocks which were available for investment at this time. In order to make the best decision for the company I chose those which I believed to have the best relationship between risk and return. The returns needed to be high whilst minimizing the risk involved with said investment. After consideration I chose the following investments, which I believed would be best for the company: Desktop Inc., Levinthal Defense Systems, Transconduit Inc., and Goldstein & Delaney Bank.... [tags: Investment, Risk, Modern portfolio theory]
1026 words (2.9 pages)
- Introduction: We have been engaged to audit the financial statements for Exxon Mobil Corporation (ExxonMobil) and assess the effectiveness of their internal controls for the fiscal year ended December 31st, 2010 in compliance with the laws of the state of Texas and the standards set forth by the Public Company Accounting Oversight Board (PCAOB). In the previous memo sent, we outlined the client’s high inherent risk due to the account balances and transactions, foreign currency translations and the complexity of accounting for and auditing the client’s vast oil reserves and inventories.... [tags: Business Analysis ]
1564 words (4.5 pages)
- The Meyer-Briggs and Jung Typology tests indicate that I am an ISTJ with preferences toward introverted, sensing, thinking, and judging, with a two-letter temperament being a SJ. The introverted preference explains that I am focused internally. The sensing preference explains that I have a propensity to gather information literally using the five senses. The thinking preference explains that I have a sensitivity to “right and wrong” decisions and enjoy following rules. The judging preference explains that I function best in an orderly world, using various tools such as to-do lists to accomplish the very idea of organized.... [tags: Personality psychology]
1433 words (4.1 pages)
- The Bybee Torture Memo On August 1, 2002, Justice Jay Bybee submitted the “Bybee Memo” or the ‘Torture Memo”, which describes the behavior that U.S. officials must exercise when interrogating outside of the continental U.S. as governed by the UN Convention Against Torture. Although this memo was rendered inoperable by the Bush Administration in 2004; for years, it gave license to American troops to inflict cruel amounts of pain, effectively “torture” upon their prisoners under the label of “coercive interrogation”.... [tags: Court Law Legal Brief Torture]
1799 words (5.1 pages)
- Cost Descriptors Memo As Human Resource Manager for our organization, it is imperative that you understand the current discussions surrounding the company’s budget issues. There are several terms used to describe cost. Hopefully this memo will provide you a better understanding of the terms used when discussing our budget. The terms of importance include, but are not limited to: fixed, variable, direct, indirect, sunk, marginal and total cost. Fixed Cost Fixed cost is a cost that does not vary depending on production or sales levels, such as rent, property tax, insurance, or interest expense (Investorwords, 2008).... [tags: Business Finance Budget]
914 words (2.6 pages)
- As you are well aware by now there was a memo circulated recently that was a very poor reflection on our company. Unfortunately the memo was seen by a client and those on the sales force has been suffering from very low morale. I’m requesting your support in starting a workshop on improving individual writing skills. At this point in time I don’t think that there is a more important project. It is extremely clear that we need to help our coworkers learn how to communicate more effectively. As unfair as it may seem, we are judged by the way we communicate, the words that we use, and the way we use them.... [tags: essays research papers]
1349 words (3.9 pages)
- MEMO TO: Jim Wilson, Regional Operations Manager FROM: (name), Mid-Atlantic Regional Shopper DATE: April 15, 2003 SUBJECT: McDonalds Shop Report In response to your request, I investigated the (insert area location)McDonalds, located off of Wisconsin Avenue. After analyzing the behavior of the employees, I noticed some policy issues that should be addressed. Included in this report are a few steps that could be taken to improve the location and increase overall customer satisfaction.... [tags: Business Case Studies]
509 words (1.5 pages)
- Modeling Subject Recruitment in Medical and Clinical Investigations
- Jesus in the Gospel of Luke
- Current Outbreak of Dengue and Its Consecuences in Health and Society
- Irony in The Necklace by Guy de Maupassant
- Analysis of Permanent Collection by Thomas Gibbons
- Kate Avery Ellison´sThe Frost Cronicles First Book Review