Free Essays on Other Peoples Children

Philosophy of Education The term philosophy can be defined in many ways. I like to define philosophy to mean â€Å"truth.† When evaluating my philosophy of education, my views are clear and concise. Education should be provided to everyone, free of charge, and free of discriminations. Education today is provided to everyone publicly at no expense. Although free, it does not come without distractions. For instance, public schooling has turned into more of a daycare type setting for teachers and students. With emphasis based on violence, and rightfully so, I feel the learning environment has deteriorated to an extreme extent. Administrators focus more on dress codes and violence prevention, than they do on test scores and how we compare to other countries. According to "A Nation at Risk", the American education system has declined due to a " rising tide of mediocrity" in our schools. States such as New York have responded to the findings and recommendations of the report by implementing such strategies as the "Regents Action Plan" and the "New Compact for Learning". In the early 1980's, President Regan ordered a national commission to study our education system. The findings of this commission were that, compared with other industrialized nations, our education system is grossly inadequate in meeting the standards of education that many other countries have developed. At one time, America was the world leader in technology, service, and industry, but overconfidence based on a historical belief in our superiority has caused our nation to fall behind the rapidly growing competitive market in the world with regard to education. The report in some respects is an unfair comparison of our education system, which does not have a national standard for goals, curriculum, or regulations, with other countries that do, but the findings nevertheless reflect the need for change. Our education system at this time is regulated by states which implement ... Free Essays on Other People's Children Free Essays on Other People's Children Philosophy of Education The term philosophy can be defined in many ways. I like to define philosophy to mean â€Å"truth.† When evaluating my philosophy of education, my views are clear and concise. Education should be provided to everyone, free of charge, and free of discriminations. Education today is provided to everyone publicly at no expense. Although free, it does not come without distractions. For instance, public schooling has turned into more of a daycare type setting for teachers and students. With emphasis based on violence, and rightfully so, I feel the learning environment has deteriorated to an extreme extent. Administrators focus more on dress codes and violence prevention, than they do on test scores and how we compare to other countries. According to "A Nation at Risk", the American education system has declined due to a " rising tide of mediocrity" in our schools. States such as New York have responded to the findings and recommendations of the report by implementing such strategies as the "Regents Action Plan" and the "New Compact for Learning". In the early 1980's, President Regan ordered a national commission to study our education system. The findings of this commission were that, compared with other industrialized nations, our education system is grossly inadequate in meeting the standards of education that many other countries have developed. At one time, America was the world leader in technology, service, and industry, but overconfidence based on a historical belief in our superiority has caused our nation to fall behind the rapidly growing competitive market in the world with regard to education. The report in some respects is an unfair comparison of our education system, which does not have a national standard for goals, curriculum, or regulations, with other countries that do, but the findings nevertheless reflect the need for change. Our education system at this time is regulated by states which implement ...

The Most Complete Collection Of Narrative Essay Topics

The Most Complete Collection Of Narrative Essay Topics Topics For A Narrative Essay Narrative essays are probably one of the simplest types of essays not depending on whether you are in high school or college. They give you the freedom to choose from a wide range of topics, including your own experience, memorable situations, role models or even fictional stories. It is crucial to choose a unique and interesting topic to engage the reader, render your personality and writing skills. There are multiple ideas on various websites but none of them can compete with the list below! Before deciding what to write about, we strongly recommend you to get familiar with essays samples, which will inspire you and motivate to work. When the topic is selected, make sure you devote enough time to researching the information and providing a 100% original content. Never copy online examples, as it may cost you a grade or even your academic success. It is better to cite every source and show how competent you are. Try to focus on the discussed subject and guide the audience through your own memories and stories. If you give yourself the freedom to put all of your thoughts on paper, you will surely write an amazing story. Why a narrative essay topic is so important? When you are given a task to write an essay, you usually have a chance to decide whether to accept the topic, given by your tutor or to come up with your own.   There shouldn’t be any rush, because the success of the essay greatly depends on the topic you select. If you still don’t know how to do it yourself, just turn to professional writing services! You need to choose a topic, which is relevant to the audience, has plenty of information online and is able to light your inner fire. Narrative essay is probably the only academic genre, where you can show your creativity and imagination to the maximum. When working on such an essay, you can omit a strict structure and other guidelines. That’s why the narrative essay is definitely the most popular and liked genre among students. However, being able to choose the topic on your own becomes very challenging for a writer. When you get a chance to write about anything you want, you can experience a lack of ideas. That is why many students stick to the first idea, which comes to their mind but the result is usually very poor. Remember, the topic should make you feel emotional and be equally interesting for the reader. To boost your imagination and help to make a choice, we have made a list of outstanding topic ideas, organized in subcategories for your maximum convenience. Experience topics The main aim of a narrative essay lies in teaching you to tell about experiences and thoughts in a literary way. To be able to write a great essay you need to think about all the experiences of your own life, including positive and negative examples. Try to provide the reader with vivid pictures and bright details in order to grab their attention. Topics on your experiences include: What was the most embarrassing situation in your life? What experience made you scared? Experience, which showed your life values; Experience, which taught to appreciate what you have; Experience, which helped you to beat cowardice; Unpleasant situation you had to face; Situation, which taught you to value life; Unforgettable days with your relatives; Tell the story of your success in facts; Experience of traveling on your own. Childhood Childhood is a unique period, when every day you learn something new, get new experiences and impressions. Children are sincere and naive, so very often they are involved in funny or even ridiculous situations. Every person has interesting stories from childhood years and they are unique, having no similarities with stories of others. That is why choosing such a topic you will get the attention of the audience and create a solid foundation for the future essay. A time, when you were hurt in the park. What happened? What situation helped you to grow up? What was the most remarkable birthday party? What made it that way? Whom you wanted to be when you were a child? Your favorite childhood game. Why? Situation, when you got hurt, when playing outdoors; What you miss the most about childhood? The most valuable thing from your childhood; Did you love crafting anything, when you were a child? Who were your favorite fairytale and cartoon characters? School years School period is very important because it is a transition time between being a child and becoming an adult. We learn lots of skills, acquire knowledge and learn how to communicate. These years are filled with challenges, which improve our personality and shape our future selves. The problems you have to face and challenges you have to solve are unique, so writing about them in your narrative essay is surely an original way to be heard. Your favorite school subject. Why? Examples, when a teacher became your role model; The first time, when you participated in a school event; The most awful thing that happened to you in class; Would you like to be friends with a particular teacher? Why? Your favorite elementary school subject; A teacher from your kindergarten or school that you are friends with; Influence of your school friends on your life; Did some teachers influence your personality? Relationships People are social creatures, so it is impossible to imagine our lives without interacting with others. We all have memories of our parents, friends and the people we love. That is why your story is always private, soul-touching and unique. Such topics are always a great source of good ideas for a narrative essay. The person, who you fear losing the most; Do you have any loyal friends? Tell about them; A breakup with a friend you have ever experienced; Who you are most afraid of? A situation, when you were rejected; A misunderstanding with a person you love; The most serious argument you have had with parents; Have you ever been in love? How did it feel? Impact of love on your personality. Topics on morality Every country has its own laws, which regulate the everyday lives of its citizens. However, there are more universal laws that have no borders and concern morality and ethics. Morality has lots of unsolved questions and the solution usually contains different opinions. For example, to do something and meet ethics norms or to do something opposite and violate those rules. That is what makes morality topics so interesting and helps to stir arguments and discussions in the class. The most difficult choice you had to make; The time, when you rebelled against the society; What ethics issues bother you the most? An example of being a coward; What is your personal ethical challenge? Have you told much lies? How do you usually treat unknown people? Do you have a habit of eavesdropping? Interests and hobbies Interests make up a huge part of our lives and determine the way we create things. This sphere includes our hobbies and all the events we participate in. If you decide to write an essay on your interests, try to think of the things you like doing, what music you prefer and the ways how you usually spend your free time. It is a topic, which is able to render your passion and show the audience the things, which you care about. The most impressive movie you have ever seen; A song, which always touches you; What talent do you want to possess and why? Is there a book character that you associate yourself with? If you were a movie director, what film would you shoot? When was the time you realized you had a talent? What movie character you would be? TV celebrities you want to have dinner with; Are you good at sports? What activities do you like the most? Traveling Every country, city, street or brick in the wall has its own story. When you are traveling, every stage is full of emotions and impressions. It doesn’t matter how often your classmates go to the mountains or to the beach. Your journey is unique because you see everything with your own eyes. So why don’t you share that experience with the audience? Your first impression from the countryside/ a big city? How you like to travel most of all? Things you always take with you on a journey; If you had enough money, where would you travel to? A perfect vacation spot; Do you have friends from abroad? Tell about a negative experience from your traveling; If you had a chance to go to a school camp once again, would you change anything? A journey you liked most of all. College life College is completely different from school. It is filled with adventures and makes us one step closer to adult life. We meet lots of new people, learn new subjects and dive into the world of independence. Isn’t it a great foundation for outstanding topics? Write about the things, which happened to you in college or about the teachers, who always impress you. College years are by right considered the best in our lives, so don’t waste such an opportunity and share your stories with the world! The most difficult exam you had to take; The most impressive lecture you have ever had; Your first day at a dorm; The most remarkable party you have ever attended; What made you desperate during the college years? Do you befriend with foreign students? Tell about your college social life. Imagine if There is a particular kind of narrative essays, which starts with ‘imagine if’. Such topics usually give you a chance to create a story, which may be possible in the future. It is definitely one of the most simple and interesting types of essays because give students a chance to make up any story they want, giving freedom to imagination and creativity. Imagine if you invented the time machine. Where would you go to? Imagine if you could become an animal. Which one would you choose and why? Imagine if you originated from a different country. Which one would it be and why? Imagine if you had millions of dollars. How would you spend them? Imagine if you were a character from a comic book. What power would you choose and why? New and remarkable topics for a narrative essay Choosing a topic is always a real challenge. That is why our experts have examined the most popular categories and came up with a list of subjects that will surely inspire you. They will make it much easier to choose what to write about and to stand out from the rest! What would you do if you won 10 million dollars in a lottery; A thing you would want to change in your life; Your first job; What would you do if you could turn back the time; The most awful thing you have ever seen in your life; The worst experience of your life; When was the first time you faced fear; Everyday issues, which bother you the most; Your best accomplishments; What do you find annoying about your own personality? Family hobbies, which you like; What makes you different from others; Do your teachers give you the freedom to express yourself? Are you into a healthy lifestyle? Lessons you have learned from sadness; Do you spend much time alone? Are you good at time management? Have you ever faced the police? Useful tips Once you have found the most suitable topic for your narrative essay, you need to proceed with learning your professor’s recommendations. In addition, you should get familiar with the best tips on how to make your essay flawless: Concentrate on specific details, which help to cover the topic. Try not to mention irrelevant information; Never embellish facts. The audience always values sincerity, so try to concentrate on your experience and not on lies; Use transition words to connect various ideas, making the text readable and coherent; Don’t forget about the conclusion. It doesn’t matter what the structure of your essay is, there should always be a summary of everything you have discussed; Make sure you like what you have written. If you don’t like the text yourself, no one will be interested in reading it; Stick to the required format and try not to overload readers with excessive data; Use various stylistic instruments and the first person to show how creative you are; Pay careful attention to the professor’s instructions. Even though narrative essays are quite flexible, there are still patterns that should be followed.

Corporate social responsibility Case Study Example | Topics and Well Written Essays - 1250 words

Corporate social responsibility - Case Study Example Socially responsible behavior is directly related to financial performance and this is evident in many recent cases. Being socially responsible places certain demands on a company but this generally 'pays off' for a company as well as for the stakeholders and the society. At the same time, concern about CSR issues could also be a PR fashion in the market. Businesses face certain challenges when they are under pressure to adopt CSR. Through certain examples this paper would compare and contrast demands placed on a business that seeks to adopt practices reflecting Corporate Social Responsibility (CSR) with those placed on a business that does not adopt this standard. There is no legislation that imposes that CSR issues have to be addressed and if a company does not live up to the social standards, there is no law that prevents others from doing business with that company. Economist Milton Friedman states that, "The business of business is to maximise profits, to earn a good return on capital invested and to be a good corporate citizen obeying the law - no more and no less". Such neo-classical economic thinking leaves no place for CSR expenditures which in any case decreases profits, contends Robins (2008). The collective good lies in maximizing profits and leaving it at that. Managers too find the demands of CSR enthusiasts vague and difficult to accomplish. Public CSR claims do not reflect in the activities and functioning of the corporations like in the case of Wal-Mart and Coca-Cola. Wal-Mart ranks fourth in terms of social responsibility in terms of its dealings with its stakeholders but there were 4851 claims filed against it in the court (Papasolomou-Doukakis, Krambia-Kapardis & Katsioloudes, 2005). Wal-Mart claims to hold down inflation in the US (Fishman, 2003), create jobs, and has customer-centered strategy as their prices are unbeatable, but they ultimately squeeze the vendors and under-pay the staff (Heyer, 2005) with the ultimate goal of maximizing shareholder wealth. They even have an efficient supply chain and source their products from developing countries and claim to be a part of their growth. Nevertheless, employee wages at Wal-Mart are as much as 31% lower than competitors (Nester, 2006). It pays practically no benefits and very often employees have to work overtime without any additional compensation. Coca-Cola too makes tall claims that by being more efficient and more profitable, it makes businesses better for the community (Ash, 2004) but findings reveal otherwise. The lists of accusations against Coke are lengthy. They have committed as many as 179 major Human Rights violations (Cairns, 2005). Since stakeholder perception is critical to the survival of the firm, some firms try to just enhance their image by attempting to be minimizing the impact on environment. This is known as greenwashing and Coca-Cola undertook this venture only as a PR venture. To discern between the actual performance and greenwashing ratings firms like Kinder, Lydenberg, Domini Research & Analytics (KLD) grade the firms on various categories of CSR (Chatterji, Levine & Toffel, 2007). Such ratings have gained importance because investors make their decision based on such ratings. The damage to Coca-Cola's brand and image was to such an extent that KLD dropped the company from its Broad Market Social Index in July 2006. Because of this,

Microbial Water Quality and Influences of Fecal Accumulation from a Essay

Microbial Water Quality and Influences of Fecal Accumulation from a Dog Exercise Area - Essay Example The results obtained from the samples were keenly analyzed and evaluated to give the relevant result. Published documents were also reviewed to compare the result found with the current experiment results (Garfield and Walker, 2008). The results found were obtained through different tools and techniques, these included sampling of the water and also an analysis of fecal accumulation and burden at different spots along the rivers and lakes. With the fecal accumulation strategy, different masses of dry feces were taken and weighed and then compared with the quantity of feces available per plot. The water sampling technique entailed sampling of the water at different points of the river and then filtering the water on specific filters to give the E.coli bacteria levels before an analysis is done on the amount of waste found in the water (Garfield and Walker, 2008). More feces were deposited at the upstream than downstream. Simple linear regression was used for a comparison and analysis of data obtained from the water sampling technique. This was to determine the relationship between the sample of water collected and the fecal amount found. For the data obtained on the fecal E.coli burden, a correlation analysis was done to give the best result on the relationship between the two (Garfield and Walker, 2008). The result from water sampling showed a variety in correlation between the amount of fecal discharge in the upstream and downstream but did not show any correlation with the seasons (Garfield and Walker, 2008). The regression analysis however showed there was a significate rate of fecal discharge during the summer than in all other existing seasons. Over time it was realized that the amount of feces discharge increased at a constant rate within and around the water sources. The feces of canine animals such as dogs were also found to contain a

Does Internet Help Spread Democracy Essay Example for Free

Does Internet Help Spread Democracy Essay How invention of the Internet changed the world? How it contributes to the spread of democracy? Does it have any impact on it? These questions are under debate till nowadays. In this paper, I will try to express my viewpoint on this dispute. To begin with, let briefly look at the Egyptian revolution which was held in 2011. It was the first revolution where social media and Internet played the crucial role. † After 30 years of living in a â€Å"fake democratic system† under Hosni Mubarak, the Egyptian people had had enough† (Pritamkabe, 2011). After fake election in 2010, people, especially young generation, decided to make a protest in order to create a real democratic system. â€Å"There was no freedom of assembly in Egypt, and protests or political activism was banned† (Pritamkabe, 2011), but social media helped people to band together . Using Twitter and Facebook, people were discussing and organizing protests against the government. Government was not happy about this and later it shut down access to the Internet for 5 days. It made situation even worse and people started to show their disappointment on the streets. A lot of videos were posted on the Youtube and the whole world could be aware about the following circumstances. All in all, the new elections were held and citizens had an opportunity to elect the new president. From this revolution, we can see how much power Internet has nowadays and that this type of media can provide actual and not fake information for other countries. One of the key elements of democracy is the good governance that means that government should focus on public interest and act in behalf of its citizens. Everybody would agree that due to the Internet, it is easier to access information you need. It enables governments, political parties and other political organizations to interface with citizens and present their ideas that lead to an increase in political participation and stimulate democracy. In addition, it allows you as the citizen to meet and exchange the views all the parties concerned. Moreover, Internet and other media help people to be aware what is going on around the world and to be up-to-date about global events. It makes people more educated and helps to make rational decisions. The other element of democracy is a freedom of opinion, speech, press and mass media. Internet is a place, where all these things became possible. Due to the Internet, people can speak their mind, share their own opinions and the most importantly – they would be heard. Now people have an opportunity to come together online and discuss on worldwide problems, provide advices and try to find solutions. Here even long distance does not play a role and it is a huge advantage of the Internet. Government accountability, and have checks and balances in a constitutional system, are crucial elements required for the functioning of a real democracy† (Pritamkabe, 2011). In order to build a good relationship between state government and its citizens, there must be transparency of governmental actions. As the result, it builds trustworthy relationship between people and government that leads to better political participation and fair elections, better observation of election results and reduction of corruption. In fact, Internet and e-governance helps to create it. Certainly, Internet has its negative side. It can be used to promote violence in the world, such as terrorist attacks. For instance, â€Å"terrorist groups like Al Qaeda have been using internet for spreading extremist and anti-American view† (Pritamkabe, 2011). There are still a lot of gang-related videos in such sites as a Youtube, which promote violent actions and incorporates more and more people. Moreover, from the Egypt example, we can see that government have a power to turn off Internet connection with respect to its own interests. It seems to be a violation of democratic system, there freedom of speech, press and mass media have to exist. To conclude, even that Internet have a negative effects on the spread of democracy, generally its positive factors overweight the negative side. I estimate that Internet possibilities, such as we know them today, are not available in non-democratic states. The development of the Internet is a result of joint actions among governments, commercials companies and individuals. It is the result of free movements of ideas and international cooperation on a global scale. In fact, these actions are heavily restricted in non-democratic countries. In authoritarian countries, Internet is used as a tool for the democratic opposition. It is used by the people who are fighting for human rights, free elections and political freedom. Therefore, Internet is a tool for spreading democracy and rooting out authoritarian rule.

Lucifer in Starlight by George Meredith :: Lucifer in Starlight George Meredith

Lucifer in Starlight by George Meredith Examining a poem in detail can bring out new meanings and ideas. By careful analysis, the full beauty of the poem can be appreciated. The poem "Lucifer in Starlight (p. 959)", by George Meredith, can be analyzed to refine the authors purpose, by examining every subtle hint, every possibility, for a deeper theme. Also, "deciphering" formal literary techniques such as metaphor, connotation, and symbolism is the key to unlock other expressions. The main theme of the poem is that Lucifer has no place out of his hell, and anything he tries to reenter heaven is futile. As with any poem, it is best to first examine how the title, "Lucifer in Starlight" relates to the body of the poem. Obviously, Lucifer is the defiant angel that was banished from heaven, and sent to the underworld of hell, where he known as Satan. The title refers to the devil as "in starlight", so this means he has to rise to a place where the stars are visible, not the fires of hell. This rising from the underworld is summed up in the first line. It is later explained that he is doing so because he is tired of his 'dark dominion." Ironically, the first line refers to Lucifer honorably, as a "Prince", while in the second line he is tagged as a fiend. This leaves the reader feeling perplexed, yet still thinking of Lucifer as the enemy. At first it may seem as Lucifer has risen to the Earth, but it is further clarified that he has elevated himself above the "rolling ball". However, god imagined the world as planar, with heaven on a higher plane, and hell on a lower plane, not spherical as defined here. From his place in the stars above earth, Lucifer looks down through the clouds, a nd observes the sinners. He is talking about the denizens of the earth, for since Adam sinned in the beginning, all of his sons and daughters are also sinners. Perhaps he can relate to them, as he is also trying for entrance to heaven. For now , he sets his mind on the people who will become denizens of his hell eventually. Here Meredith shows how much hubris the devil really has, for the reader can just see Lucifer savoring over the masses entering his vile domain. Then, Lucifer peers at the most extreme places in the world, describing the sands of Africa.

Masters of the Universe

Consolidation of Variable Interest Entities A Roadmap to Applying the Variable Interest Entities Consolidation Model March 2010 FASB material, copyright  © by the Financial Accounting Foundation, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116, is reproduced with permission. This publication is provided as an information service by the Accounting Standards and Communications Group of Deloitte & Touche LLP. It does not address all possible fact patterns and the guidance is subject to change.Deloitte & Touche LLP is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte & Touche LLP shall not be responsible for any loss sustained by any person who relies on this publication.As used in this document, â€Å"Deloitte† means Deloitte & Touche LLP, a subsidiary of Deloitte LLP. Please see www. deloitte. com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. March 2010 Contents Acknowledgments Introduction Section 1 — Overview, Background, and Scope 1. 01 1. 02 Determining Which Consolidation Model to Apply Consideration of Substantive Terms, Transactions, and Arrangements Substantive Terms and Arrangements Scope and Scope Exceptions Overall Scope Considerations 1. 3 1. 04 1. 05 1. 06 1. 07 1. 08 1. 09 1. 10 1. 11 Application of the VIE Model in ASC 810-10 to Non-SPEs Qualification of a SPE as a Voting Interest Entity Application of the VIE Model in ASC 810-10 to Multitiered Legal Entity Structures Application of the VIE Model in ASC 810-10 to a Single Entity Held by a Holding Company Elimination of the QSPE Scop e Exception Determining Whether Employee Benefit Plans Should Apply the VIE Model in ASC 810-10 to Their Investments Scope Exception for Certain Investment CompaniesDefinition of Governmental Organization Determining Whether a Governmental Organization Was Used to Circumvent the Provisions of the VIE Model in ASC 810-10 Scope Exception for Not-for-Profit Organizations Scope Exception for Not-for-Profit Organizations: Circumvention of the VIE Model in ASC 810-10 Accounting Guidance for NFPs as a Result of the VIE Model in ASC 810-10 Determining Whether Entities That Present Their Financial Statements Similarly to a NFP Can Qualify for the Not-for-Profit Scope Exception Retention of a For-Profit Reporting Entity’s Accounting Policies in the Consolidated Financial Statements of a Not-for-Profit Reporting Entity Scope Exception for Separate Accounts of Life Insurance Entities Meaning of the Term â€Å"Exhaustive Effort† Application of Exhaustive-Efforts Scope Exception to an Inactive Entity Created Before December 31, 2003 Definition of a Business Under ASC 810-10-15-17(d) Effect of the Change in the Definition of a Business on the Business Scope Exception 1 2 5 6 8 8 9 10 10 10 11 12 13 14 14 14 15 15 15 16 17 17 17 18 18 18 19 19 19 20 20 21 21 21 Scope Exception for Employee Benefit Plans Scope Exception Related to Investments Accounted for at Fair Value Scope Exception for Governmental Organizations Scope Exception for Not-for-Profit Organizations 1. 12 1. 13 1. 14 1. 15 1. 16 Scope Exception Related to Separate Accounts of Life Insurance Entities 1. 17 1. 18 1. 19 1. 20 1. 21 Exhaustive-Efforts Scope Exception Business Scope Exception i 1. 22 1. 23 1. 24 1. 25 1. 26 1. 27 1. 28 1. 29 1. 30 1. 31 Applying the Business Scope Exception on aReporting-Entity-by-Reporting-Entity Basis Determining When a Reporting Entity Should Assess Whether It Meets the Business Scope Exception Under the VIE Model in ASC 810-10 Definition of a Joint Venture and Joint Control as Used in the VIE Model in ASC 810-10-15-17(d)(1) Determining Whether the Reporting Entity Participated Significantly in the Design or Redesign of the Legal Entity Scope Exception for Legal Entities Deemed to Be a Business — Determining Whether Substantially All of the Activities Either Involve or Are Conducted on Behalf of the Reporting Entity Scope Exception for an Entity Deemed to Be a Business — Determining Whether Financing Is Subordinated Additional Financial Support — Put and Call Options Business Scope Exception — Determining Whether More Than Half the Total of Equity, Debt, and Other Subordinated Financial Support Has Been Provided Lessee’s Determination of Whether a Capital Lease With an Entity Should Be Assessed Under the VIE Model in ASC 810-10 Consideration of Leasing Activities in Which the Legal Entity Is the Lessor 22 22 24 25 25 27 28 29 30 30 Section 2 — Determination of Whether the Reporting Entity Holds a Variab le Interest Identifying a Variable Interest 2. 01 2. 02 2. 03 2. 04 2. 05 2. 06 2. 07 2. 08 2. 09 2. 10 2. 11 2. 12 2. 13 2. 14 2. 15 2. 16 2. 17 2. 18 2. 19 2. 20 2. 21 2. 22 2. 23 2. 24 2. 5 Determining Whether a Holding Is a Variable Interest Identifying Whether a Reporting Entity Holds a Variable Interest Requiring Analysis Under the VIE Model in ASC 810-10 Determining When a Lease Represents a Variable Interest — Potential VIE Is a Lessor Determining When a Lease Represents a Variable Interest — Potential VIE Is a Lessee Determining Variable Interests Under the VIE Model in ASC 810-10 in a Synthetic CDO Structure When Decision-Maker Fees Are Not Treated as a Variable Interest Determining Variable Interests Under the VIE Model in ASC 810-10 in a Synthetic CDO Structure When Decision-Maker Fees Are Treated as a Variable Interest Netting of Instruments Other Than Equity Applying the VIE Model in ASC 810-10 to Trust Preferred Security Arrangements and Similar Structur es Implicit Variable Interests and â€Å"Activities Around the Entity† — Illustration Implicit Variable Interests — Call and Put Options Implicit Variable Interests — Total Return Swap Implicit Variable Interests —Back-to-Back Asset Guarantee Determining When an Implicit Guarantee (Variable Interest) Exists in a Related-Party Transaction Implicit Variable Interests — Waiving of a Management Fee Overview of the Guidance in ASC 810-10-25-21 Through 25-36 Applying the Guidance in ASC 810-10-25-21 Through 25-36 to Purchase and Supply Arrangements Applying ASC 810-10-25-21 Through 25-36 to PPAs, Tolling Agreements, and Similar Arrangements Off-Market Supply Agreements Determining Whether a Variable Interest Is Subordinated Financial Support Analyzing a MMF for Consolidation How to Determine Whether an Embedded Derivative Is Clearly and Closely Related Economically to Its Asset or Liability Host Applying the Guidance in ASC 810-10-25-35 and 25-36 Meaning of the Term â€Å"Derivative Instrument† in ASC 810-10-25-35 and 25-36 Meaning of the Term â€Å"Market-Observable Variable† in ASC 810-10-25-35 Meaning of the Term â€Å"Essentially All† in ASC 810-10-25-36 32 32 32 35 36 37 37 39 39 40 43 43 46 46 47 47 51 51 53 55 56 58 59 60 62 63 65 66 66 Implicit Variable Interests The By-Design Approach to Determining Variability ii Section 3 — Determination of Whether an Entity Is a VIE Determination of Whether Equity Investment at Risk Is Sufficient Under ASC 810-10-15-14(a) 3. 01 3. 2 3. 03 3. 04 3. 05 3. 06 3. 07 3. 08 3. 09 3. 10 3. 11 3. 12 3. 13 Determination of Equity Investment at Risk When the Investor’s Initial Accounting Basis of Its Equity Differs From Fair Value Including Mezzanine Equity Instruments in Total Equity Investment at Risk Determination of Whether a Personal Guarantee Provided by an Equity Holder Represents Equity Investment at Risk Determining Whether an Instrument With a R isks-and-Rewards Profile Similar to That of an Equity Investment Qualifies as Equity Impact of ASC 810-10-15-14(a) on the Determination of Total Equity Investment at Risk When the Investee Is a Foreign Entity Non-At-Risk EquityInvestment as a Variable Interest Definition of â€Å"Profits and Losses,† as Used in ASC 810-10-15-14(a)(1) Including Fixed-Rate, Nonparticipating Preferred Stock in the Total Equity Investment at Risk Determining Whether an Equity Interest Participates Significantly in the Profits and Losses of an Entity Impact of Put Options, Call Options, and Total Return Swaps on Equity Investment at Risk Impact of Contracts and Instruments That Protect an Equity Investor on Equity Investment at Risk Qualification of Equity Investments Issued in Exchange for Promises to Perform Services as Equity Investment at Risk Determining Whether Fees Received by an Equity Investor for Services Performed at Inception or in the Future Reduce Equity Investment at Risk Determinin g Whether Funds Borrowed by a Reporting Entity Qualify as Equity Investment at Risk Determining Whether a Quantitative Assessment of Equity Investment at Risk Is Necessary Qualitative Versus Quantitative Analysis of Whether an Entity Is a VIE Quantitative Expected-Loss Calculation — After Adoption of ASU 2009-17 Consideration of Subordinated Debt in a Qualitative Assessment of Sufficiency of Equity at Risk 68 69 70 70 70 71 71 71 72 72 73 73 74 76 77 77 78 78 78 79 80 81 81 82 83 84 84 85 86 87 87 88 88 90 90 91 92 92 93 94 94 95Equity Investments That Participate in Profits and Losses Equity Investments Provided Directly or Indirectly by the Entity Equity Investments Financed by the Entity 3. 14 3. 15 3. 16 3. 17 3. 18 Sufficiency of Equity Investment at Risk Determining Whether, as a Group, the Holders of the Equity Investment at Risk Lack Any of the Characteristics in ASC 810-10-15-14(b) 3. 19 3. 20 3. 21 3. 22 3. 23 3. 24 3. 25 3. 26 Characteristics in ASC 810-10-15-14(b) Held Within the Group of At-Risk Equity Investors Meaning of the Phrase â€Å"As a Group† in ASC 810-10-15-14(b) Impact of ASC 810-10-15-14(b) on Determining Characteristics of Control or Lack of Control by the Group of Holders of Equity Investment t Risk Minimum Amount of Equity Held By an Investment Manager or GP Ability of Holders of Equity Investment at Risk to Remove a Decision Maker Decision-Making Rights Granted to an Equity Holder Separately From Its Equity Investment at Risk Nonsubstantive Equity Investment of a GP Determining Whether a GP Interest Should Be Aggregated With an LP (or Other) Interest in the Evaluation of a Legal Entity Under ASC 810-10-15-14 Meaning of â€Å"Insignificant† in the Analysis of Fees Paid to a Decision Maker or Service Provider Meaning of the Term â€Å"Same Level of Seniority† Whether a Fee Paid to a Decision Maker or Service Provider That Represents a Variable Interest Could Potentially Not Be Significant to a VIE Determi ning Whether a Decision Maker or Service Provider Must Evaluate ASC 810-10-25-38A If the Fees Paid to the Decision Maker or Service Provider Do Not Represent a Variable Interest Reassessment of Fees Paid to a Decision Maker or Service Provider Determining Whether a Reporting Entity Lacks the Obligation to Absorb Expected Losses of the Entity Use of a Qualitative Approach to Determine Whether a Reporting Entity Has the Obligation to Absorb Expected Losses iii Analysis of Fees Paid to a Decision Maker or Service Provider 3. 27 3. 28 3. 29 3. 30 3. 31 3. 32 3. 33 Obligation to Absorb the Expected Losses of the Legal Entity 3. 34 3. 35 3. 36Determining Whether a Put Option on an Equity Interest Causes the Holders of the Equity Investment at Risk to Lack the Obligation to Absorb the Expected Losses of the Entity Determining Whether a Put Option on a Potential VIE’s Assets Causes the Holders of the Equity Investment at Risk to Lack the Obligation to Absorb the Expected Losses of th e Potential VIE Determining the Effect of Other Arrangements on the Ability of the Equity Group to Absorb Expected Losses or Receive Residual Returns Determining Whether an Investor Has the Right to Receive the Expected Residual Returns of a Legal Entity and Whether the Investor’s Return Is Capped Impact of an Outstanding Equity Call Option on Whether a Return Is Capped Impact of a Call Option on n Entity’s Assets on Whether a Return Is Capped Application of the VIE Test Under ASC 810-10-15-14(c) Considering a Reporting Entity’s Obligations to Absorb Expected Losses and Rights to Receive Expected Residual Returns Other Than Those Provided Through Equity Interests When Applying ASC 810-10-15-14(c) Anticipated Changes in the Assessment of Whether an Entity Is a VIE Future Sources of Financing to Include in a Potential VIE’s Expected Cash Flows Guidance on Reconsideration of Whether an Entity Is a VIE Valuation of Equity Investment at Risk When a Reconsidera tion Event Occurs Isolating the Impact of a Change in the Entity’s Governing Documents or Contractual Arrangements and the Impact of Undertaking Additional Activities or Acquiring Additional Assets Entering Into Bankruptcy Emerging From Bankruptcy Determining Whether a Development-Stage Entity Is a Business Development Stage Entities — Assessing the Sufficiency of Equity Investment at Risk 96 96 96 98 98 99 99 99 100 101 102 102 103 104 104 107 107 108 108 109 109 109Right to Receive the Expected Residual Returns of the Legal Entity 3. 37 3. 38 3. 39 3. 40 3. 41 Determining When the Equity Investors as a Group Are Considered to Lack the Characteristics in ASC 810-10-15-14(b)(1) Initial Determination of Whether an Entity Is a VIE 3. 42 3. 43 3. 44 3. 45 3. 46 3. 47 3. 48 3. 49 3. 50 Reconsideration of Whether the Entity Is a VIE Development-Stage Entities Section 4 — Expected Variability and the Calculation of Expected Losses and Expected Residual Returns 4. 01 4 . 02 4. 03 4. 04 4. 05 4. 06 4. 07 4. 08 4. 09 4. 10 4. 11 4. 12 4. 13 4. 14 4. 15 4. 16 Definitions of Expected Losses and Expected Residual Returns The Meaning of â€Å"Net Assets† Under the VIE Model in ASC 10-10 Purpose of Calculating the Expected Losses and Expected Residual Returns of the Entity How to Determine the Expected Losses and Expected Residual Returns of the Entity How to Determine the Expected Losses and Expected Residual Returns of the Entity — Example Use of the Indirect Method to Calculate Estimated Cash Flows Noncash Receipts or Distributions in the Determination of an Entity’s Estimated Cash Flow Scenarios Inclusion of Low-Income Housing or Similar Tax Credits in a Calculation of Expected Losses and Expected Residual Returns Effect of Options on Specific Assets in the Determination of the Entity’s Estimated Cash Flows Developing Estimated Cash Flow Scenarios and Assigning Probabilities for Expected Loss and Expected Residual Return C alculations Discount Rate to Use in the Calculation of Expected Losses and Expected Residual Returns Cash Flow and Fair Value Approaches to Calculating Expected Losses and Expected Residual Returns Appropriateness of Using Either the Cash Flow Approach or Fair Value Approach to Calculate Expected Losses and Expected Residual Returns Determining Whether Decision-Maker and Service-Provider Fees Are Included in Expected Losses and Expected Residual Returns Whether ASC 820-10 Affects an Expected Losses/Residual Returns Calculation Allocation Methods That May Be Used to Determine Whether Fees Paid to Decision Makers or Service Providers Are Variable Interests iv 111 111 112 113 113 116 121 123 124 124 125 127 128 128 129 129 130 Section 5 — Interests in Specified Assets of the VIE and Silo Provisions 5. 01 5. 02 5. 03 5. 04 5. 05 5. 06 5. 07 5. 08 5. 9 Accounting for Interests in Specified Assets and Silos Consideration of Interests in Specified Assets Guarantees That Represent a Variable Interest in the Entity Versus a Variable Interest in Specified Assets of the Entity Considering a Party’s Other Interests in the Analysis of a Variable Interest in Specified Assets of an Entity Considering a Related Party’s Interest in the Analysis of a Variable Interest in Specified Assets of an Entity Determining Whether a Silo Exists Determining Whether a Host Entity Is a VIE When a Silo Exists Determining Whether the Silo Is a VIE If the Host Entity Is a VIE Determining the Primary Beneficiary of the Host Entity and Silo 133 133 135 136 136 137 138 139 140 141 Section 6 — Determination of the Primary Beneficiary 6. 01 6. 02 6. 03 6. 04 6. 05 6. 06 6. 07 6. 08 6. 09 6. 10 6. 11 6. 12 6. 13 6. 14 6. 15 6. 16 6. 17 6. 18 6. 19 6. 20 6. 21 6. 22 6. 23 6. 24 6. 25 6. 26 6. 27 6. 28 6. 9 How a Reporting Entity Applies the VIE Model in ASC 810-10 When It Appears Not to Be the Primary Beneficiary Determining Whether More Than One Reporting Entity Can Consol idate a VIE Risks to Which an Entity Is Designed to Be Exposed Risks and Related Activities Assessing Power to Direct When Decisions Are Made by a Board of Directors and a Manager Consideration of All Risks in the Determination of the Power to Direct Activities of the VIE Evaluating Power to Direct the Most Significant Activities of the VIE in Scenarios Involving a PPA Determination of a Primary Beneficiary for Every VIE Evaluating the Characteristic in ASC 810-10-25-38A(b) Reconsideration of the Primary Beneficiary of a VIE The Effect of Contingencies on Determining the Primary Beneficiary Consideration of Forward Starting Rights in the Primary Beneficiary Analysis Determination of Whether Kickout Rights are Substantive Consideration of a Board of Directors as a Single Party in the Assessment of Kickout Rights Withdrawal and Liquidation Rights Evaluation of Shared Power Versus Multiple Unrelated Parties Performing Different Significant Activities Shared Power Within a Related-Party Group VIEs With No Ongoing Activities That Significantly Affect Their Economic Performance Factors to Consider in the Determination of Whether a Relationship Represents a De Facto Agency Aggregation of Variable Interests When the Reporting Entity Does Not Hold a Variable Interest Directly in the Entity De Facto Agency Relationship When Only Part of an Interest Is Received as a Loan or Contribution From Another Reporting Entity Related-Party Determination — Interests Received as a Loan Considering Whether Restrictions on a Reporting Entity’s Ability to Sell, Transfer, or Encumber Its Interests in a VIE Constitute Constraint The Effect of a Put Option on a De Facto Agency Relationship Consideration of De Facto Agent Requirements in the Determination of the Primary Beneficiary in a Joint Venture Arrangement Determining Which Party in a Related-Party Group Is Most Closely Associated With a VIE Determining the Primary Beneficiary in a Related-Party Group When Members of th e Related-Party Group Are Under Common Control Consideration of the Factors in ASC 810-20 in the Determination of Which Related Party Is Most Closely Associated Application of ASC 810-10-25-38A and ASC 810-10-25-44 When a Fee Paid to an Asset Manager Represents a Variable Interest and the Asset Manager Is Part of a Related-Party Group 42 143 143 144 144 145 147 148 149 149 151 153 155 156 156 157 157 158 159 160 160 162 162 163 164 165 166 166 169 169 170 Related-Party Considerations v Section 7 — Initial Measurement and Subsequent Accounting Initial Measurement 7. 01 7. 02 7. 03 Balance Sheet Classification of Parent’s Interest — Primary Beneficiary and VIE Under Common Control Qualification of an Entity as a Business for Recording Goodwill Upon Consolidation of a VIE Accounting After Initial Measurement — Intercompany Eliminations 173 173 173 174 175 175 Accounting After Initial Measurement Section 8 — Presentation and Disclosures Presentation 8. 01 8. 02 8. 03 8. 04 8. 5 Application of the Presentation Requirements of ASC 810-10-45-25 to a Consolidated VIE Separate Presentation of Certain Assets and Liabilities of Consolidated VIEs Optional Separate Presentation of Certain Assets and Liabilities of Consolidated VIEs Disclosures About Securitizations Under ASC 860 Versus Disclosures About Securitizations Under the VIE Model in ASC 810-10 Definition of Maximum Exposure to Loss for Disclosure Purposes 177 177 177 178 179 179 181 182 Disclosures Section 9 — Transition 9. 01 9. 02 Whether a Reporting Entity Can Elect the FVO for a VIE Upon Adopting ASU 2009-17 Determining VIE and Primary-Beneficiary Status Upon Transition to ASU 2009-17 183 186 186 Appendix A — Implementation Guidance Appendix B — Glossary of Terms and Abbreviations Used in the VIE Model in ASC 810-10 Glossary of Terms Abbreviations 189 205 205 206 Appendix C — Key Differences Between U. S. GAAP and IFRSs — Consolidated Financ ial Statements Appendix D — Reference Guide Appendix E — Glossary of Standards 208 212 214 vi AcknowledgmentsAshley Carpenter, Rob Comerford, Jon Howard, Jeff Nickell, Randall Sogoloff, Joe Ucuzoglu, and Bob Uhl provided the thought leadership necessary to formulate our views on the application of the key principles of Statement 167. James Barker worked with our Energy & Resources practice to develop our views on the application of Statement 167 to power purchase arrangements. Jim Schnurr continues to work with our Investment Management practice to provide input on Statement 167 and the ongoing joint consolidations project. Xihao Hu and Sherif Sakr provided invaluable insight and perspective from our Financial Accounting and Reporting Services group.Joe Renouf, Michael Lorenzo, Lynne Campbell, Yvonne Donnachie, and Joan Meyers delivered the first class production effort that we have come to rely on for all of Deloitte’s publications. Courtney Sachtleben worked t irelessly to ensure this Roadmap was of the highest quality. Her dedication and commitment got this publication to the finish line. Others deserving of mention and appreciation are Robin Kramer, Shan Nemeth, Adrian Schwartz, Kirsten Aunapu, Angela Bacarella, Chris Rogers, Trevor Farber, Catherine Smith, Madhu Gopinath, Shane Burak, Joseph Berry, Kirby Rattenbury, Will Estilo, Chris Toppin, and Thalia Smith. 1 Introduction March 2010 To the clients, friends, and people of Deloitte: Welcome back to the land of variable interest entities (VIEs).It’s been two-and-a-half years since we last updated our Roadmap on consolidation of VIEs, and the consolidations terrain has changed significantly in that time. The most noteworthy changes are (1) the issuance of Statement 167, (2) the release of the FASB Accounting Standards Codification (the â€Å"Codification†), and (3) the continued work of the FASB and IASB on a joint consolidations project. Statement 167 — Whatâ€℠¢s All the Fuss About? In June 2009, the FASB issued Statement 167, which amends the consolidation guidance applicable to VIEs. The Statement 167 amendments are effective as of the first annual reporting period that begins after November 15, 2009, and for interim periods within that first annual reporting period.Statement 167 replaces Interpretation 46(R)’s risks-and-rewards-based quantitative approach to consolidation with a more qualitative approach that requires a reporting entity to have some economic exposure to a VIE along with â€Å"the power to direct the activities that most significantly impact the economic performance of the entity. † The FASB also reminded its constituents that only substantive terms, transactions, and arrangements should affect the accounting conclusions under Statement 167; the SEC has reiterated this principle in numerous public speeches. It’s not surprising that many initially concentrated on understanding how Statement 167 would affect qualifying special-purpose entities (QSPEs) and other structured finance entities because that seemed to be the FASB’s focus, particularly given that six of the nine implementation examples in Statement 167 address structured finance entities.However, the initial adoption of Statement 167 has proved time-consuming because it does not just apply to structured finance entities or entities historically considered VIEs under Interpretation 46(R). In addition, even if a reporting entity determines that it does not need to consolidate a VIE under Statement 167, it must provide extensive disclosures for any VIEs in which it holds a variable interest. In addition to the overall change in the Interpretation 46(R) consolidation model, Statement 167 contains the following significant provisions and amendments: †¢ †¢ ThescopeexemptionforQSPEsisremovedfromInterpretation46(R). Asaresult,transferors,sponsors, and investors in QSPEs need to consider the consolidation and di sclosure provisions in Statement 167.Kickoutrightsandparticipatingrightsareignoredin(1)thedeterminationofwhetheranentityisaVIE and (2) the identification of the VIE’s primary beneficiary, unless the rights are held by a single reporting entity. AreportingentitymustcontinuallyreconsiderwhichvariableinterestholderistheVIE’sprimary beneficiary. Areportingentitymustreconsideranentity’sVIEstatusiftheequityinterestholderslosethepowerfrom the voting rights of those investments to direct the entity’s most significant activities. Anexemptiontothedefactoagentrequirementsexistswhenmutualtransferrestrictionsarebasedon terms mutually agreed to by willing, independent parties. Areportingentitymustmeetsixconditionstodeterminethatfeespaidtoadecisionmakerorservice provider do not represent a variable interest.The FASB believes that fees paid to a reporting entity that acts solely as a fiduciary or agent should typically not represent a variable interest because those fees would typically meet these six conditions. 2 †¢ †¢ †¢ †¢ †¢ Aprimarybeneficiarymustpresentseparately,onthefaceofthebalancesheet,(1)assetsofconsolidated VIEs that can only be used to settle obligations of those VIEs and (2) liabilities of consolidated VIEs for which creditors do not have recourse to the general credit of the primary beneficiary. Powerisonlyconsideredshared(andnopartyconsolidates)if(1)twoormoreunrelatedpartiestogether have the power to direct the VIE’s most significant activities and (2) decisions about those activities require the consent of each of the parties sharing power. †¢To address the new consolidations guidance under Statement 167, this edition of the Roadmap (1) includes over 30 new Q&As and (2) updates our existing Interpretation 46(R) Q&As. The Codification — Do You Have All the New Topics, Subtopics, Sections, Subsections, and Paragraphs Memorized? In July 2009, the Codification became the single source of aut horitative nongovernmental U. S. GAAP. The Codification’s hierarchy is topic, subtopic, section, and paragraph, in that order, each with a numerical designation (e. g. , ASC 810-10-25-37, which was formerly paragraph 6 of Interpretation 46(R)). ASU 2009-17 incorporated Statement 167’s amendments to the VIE model into the Codification. The beginning of each section of this Roadmap contains quotes from the appropriate Codification paragraphs.In addition, for those of you still trying to find your way through the Codification, we thought it would be helpful for each Codification paragraph to be followed by a reference to the corresponding pre-Codification paragraph from Interpretation 46(R), as amended by Statement 167. Although ASC 810-10-55-37 (paragraph B22 of Interpretation 46(R)1) might not roll off your tongue like â€Å"B22 of FIN 46(R)† used to, the Codification is here to stay. However, we suspect that just as there are probably a few accountants who are c linging to their last version of the FASB’s Original Pronouncements (we know you are out there! ), there are some that might need a little help finding the new VIE guidance in the Codification.Accordingly, Appendix D of this Roadmap includes a guide that cross-references the paragraphs from ASC 810-10 to the guidance in Interpretation 46(R), as amended by Statement 167. The reference guide also lists the accounting topic and section from the Roadmap that these paragraph references apply to. (We thought a few hints and a little â€Å"cheat sheet† among friends might be helpful while we all adjust to the new layout of the Codification. ) No More Big Changes Expected Anytime Soon — Right? Well — not really. Did we mention the joint consolidations project that the FASB and the IASB are working on? The IASB and FASB are jointly developing guidance for consolidation of all entities, including entities currently considered VIEs.Although Statement 167 was not dev eloped as part of the joint project, the IASB staff closely followed the FASB’s work on Statement 167. The boards’ goal is to have one consolidation model whose principles are similar to those in Statement 167 and that would apply to all entities. In December 2008, the IASB issued Exposure Draft 10 (ED 10), Consolidated Financial Statements. Although the boards believe that the objectives for assessing control of structures under Statement 167 and ED 10 are fundamentally consistent, they also acknowledged that the guidance in ED 10 can potentially result in different consolidation conclusions — particularly for certain investment funds.The boards are continuing to jointly deliberate several critical issues, including the evaluation of principal and agent relationships, the concept of effective control (e. g. , the ability to control a voting interest entity when a reporting entity holds fewer than half of the voting rights), related parties, disclosures, and pre sentation requirements. The boards have stated their goal to issue an exposure draft during the second quarter of 2010 and a final standard before the end of 2010. We will continue to keep you updated on these developments through our Heads Up newsletters as well as through our Dbriefs webcast series. 2 For a discussion of the current differences between the consolidation models under IFRSs and U. S. GAAP, see Appendix C of this Roadmap. 1 2You see – that’s helpful – isn’t it? If you wish to receive Heads Up and other accounting publications issued by Deloitte’s Accounting Standards and Communications Group, please register at www. deloitte. com/us/subscriptions. Join Dbriefs to receive notifications about future webcasts at www. deloitte. com/us/dbriefs. 3 What’s This I Hear About a Deferral of Statement 167? Can I Get One Too? In February 2010, the FASB issued ASU 2010-10, which amends certain provisions of the VIE model in ASC 810-10. The ASU defers the effective date of Statement 167 for a reporting entity’s interest in certain entities and certain money market mutual funds.It also addresses concerns that the joint consolidation model under development by the FASB and IASB may result in a different consolidation conclusion for asset managers and that an asset manager consolidating certain funds would not necessarily provide useful information to investors. In addition, the ASU amends certain provisions of ASC 810-10-55-37 (paragraph B22 of Interpretation 46(R), as amended by Statement 167) to change how a decision maker or service provider determines whether its fee is a variable interest. This Roadmap reflects the changes to ASC 810-10-55-37. The ASU will defer the application of Statement 167 for a reporting entity’s interest in an entity (1) that has all the attributes of an investment company or (2) for which it is industry practice to apply measurement principles for financial reporting purposes that are consistent with those followed by investment companies.The deferral does not apply in situations in which a reporting entity has the explicit or implicit obligation to fund losses of an entity that could potentially be significant to the entity. The deferral also does not apply to interests in securitization entities, asset-backed financing entities, or entities formerly considered QSPEs. In addition, the deferral applies to a reporting entity’s interest in an entity that is required to comply with or operate in accordance with requirements similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. These entities will be subject to the deferral even if the money market fund manager has an xplicit or implicit obligation to fund losses of the entity. For reporting entities that meet the deferral conditions, the guidance on VIEs in ASC 810-10 (before the amendments in ASU 2009-17 and the amendments to 810-10-55-37 in ASU 2010- 10) would be used to determine whether (1) the legal entity is a VIE, (2) the reporting entity has a variable interest in a VIE, and (3) the reporting entity is the primary beneficiary of a VIE. However, all reporting entities must provide the disclosures in ASC 81010, as amended by ASU 2009-17, for all VIEs in which they hold a variable interest or for which they are the primary beneficiary — regardless of whether the entity qualifies for the deferral. Q&A 1. 1 of this Roadmap includes a decision tree to help you understand how the deferral may affect which consolidation model you will need to apply. In addition, see our January 27, 2010, Heads Up for information about the ASU’s other significant provisions. The Road Forward We understand that Statement 167 (like Interpretation 46(R) before it) can be a difficult standard to apply — particularly when you are new to its provisions. We believe this Roadmap can help you find your way and can help make the complex sound a little simpler. To those new to VIE land, and to our grizzled VIE veterans, we look forward to working with you. Deloitte & Touche LLP 4 Section 1 — Overview, Background, and Scope ASC 810-10 5-8 The Variable Interest Entities Subsections clarify the application of the General Subsections to certain legal entities in which equity investors do not have sufficient equity at risk for the legal entity to finance its activities without additional subordinated financial support or, as a group, the holders of the equity investment at risk lack any one of the following three characteristics: a. b. c. The power, through voting rights or similar rights, to direct the activities of a legal entity that most significantly impact the entity’s economic performance The obligation to absorb the expected losses of the legal entity The right to receive the expected residual returns of the legal entity.Paragraph 810-10-10-1 states that consolidated financial statements are usually necessary for a fair presentation if one of the entities in the consolidated group directly or indirectly has a controlling financial interest in the other entities. Paragraph 81010-15-8 states that the usual condition for a controlling financial interest is ownership of a majority voting interest. However, application of the majority voting interest requirement in the General Subsections of this Subtopic to certain types of entities may not identify the party with a controlling financial interest because the controlling financial interest may be achieved through arrangements that do not involve voting interests. Paragraph 1] 05-8A The reporting entity with a variable interest or interests that provide the reporting entity with a controlling financial interest in a variable interest entity (VIE) will have both of the following characteristics: a. b. The power to direct the activities of a VIE that most significantly impact the VIE’s economic performance The obligation to abs orb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. [Paragraph 1A] 05-9 The Variable Interest Entities Subsections explain how to identify VIEs and how to determine when a reporting entity should include the assets, liabilities, noncontrolling interests, and results of activities of a VIE in its consolidated financial statements. Transactions involving VIEs are common.Some reporting entities have entered into arrangements using VIEs that appear to be designed to avoid reporting assets and liabilities for which they are responsible, to delay reporting losses that have already been incurred, or to report gains that are illusory. At the same time, many reporting entities have used VIEs for valid business purposes and have properly accounted for those VIEs based on guidance and accepted practice. [Paragraph E5] 05-10 Some relationships between reporting entities and VIEs ar e similar to relationships established by majority voting interests, but VIEs often are arranged without a governing board or with a governing board that has limited ability to make decisions that affect the VIE’s activities.A VIE’s activities may be limited or predetermined by the articles of incorporation, bylaws, partnership agreements, trust agreements, other establishing documents, or contractual agreements between the parties involved with the VIE. A reporting entity implicitly chooses at the time of its investment to accept the activities in which the VIE is permitted to engage. That reporting entity may not need the ability to make decisions if the activities are predetermined or limited in ways the reporting entity chooses to accept. Alternatively, the reporting entity may obtain an ability to make decisions that affect a VIE’s activities through contracts or the VIE’s governing documents. There may be other techniques for protecting a reporting entity’s interests.In any case, the reporting entity may receive benefits similar to those received from a controlling financial interest and be exposed to risks similar to those received from a controlling financial interest without holding a majority voting interest (or without holding any voting interest). [Paragraph E7] The power to direct the activities of a VIE that most significantly impact the entity’s economic performance and the reporting entity’s exposure to the entity’s losses or benefits [Paragraph 14A] are determinants of consolidation in the Variable Interest Entities Subsections. [Paragraph E7] The Variable Interest Entities Subsections also provide guidance on determining whether fees paid to a decision maker or service provider should be considered a variable interest in a VIE. 5 ASC 810-10 (continued) 5-11 VIEs often are created for a single specified purpose, for example, to facilitate securitization, leasing, hedging, research and dev elopment, reinsurance, or other transactions or arrangements. The activities may be predetermined by the documents that establish the VIEs or by contracts or other arrangements between the parties involved. However, those characteristics do not define the scope of the Variable Interest Entities Subsections because other entities may have those same characteristics. The distinction between VIEs and other entities is based on the nature and amount of the equity investment and the rights and obligations of the equity investors. Paragraph E18] 05-12 Because the equity investors in an entity other than a VIE generally absorb losses first, they can be expected to resist arrangements that give other parties the ability to significantly increase their risk or reduce their benefits. Other parties can be expected to align their interests with those of the equity investors, protect their interests contractually, or avoid any involvement with the entity. [Paragraph E19] 05-13 In contrast, eithe r a VIE does not issue voting interests (or other interests with similar rights) or the total equity investment at risk is not sufficient to permit the legal entity to finance its activities without additional subordinated financial support.If a legal entity does not issue voting or similar interests or if the equity investment is insufficient, that legal entity’s activities may be predetermined or decision-making ability is determined contractually. If the total equity investment at risk is not sufficient to permit the legal entity to finance its activities, the parties providing the necessary additional subordinated financial support most likely will not permit an equity investor to make decisions that may be counter to their interests. That means that the usual condition for establishing a controlling financial interest as a majority voting interest does not apply to VIEs. Consequently, a standard that requires ownership of voting stock is not appropriate for such entities . [Paragraph E20] 1. 01 Determining Which Consolidation Model to ApplyUnder ASC 810-10, there are two primary1 models for determining whether consolidation is appropriate: the VIE model and the voting interest model. ASU 2009-17 amends the VIE model and is effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, and for interim periods within those reporting periods. ASU 2010-10 indefinitely defers the amendments in ASU 2009-17 for a reporting entity’s interest in certain entities and amends the guidance in paragraph 810-10-55-37 (as amended by ASU 2009-17) on determining whether a decision-maker or service-provider fee represents a variable interest. The deferral will be most applicable to interests in certain investment funds.For reporting entities that meet the deferral conditions, the guidance on VIEs in ASC 810-10 (before the amendments in ASU 2009-17 and the amendments to 810-10-55-37 in ASU 2010- 10) would be used to determine whether the legal entity is a VIE, whether the reporting entity has a variable interest in a VIE, and whether the reporting entity is the primary beneficiary of a VIE. However, all reporting entities must provide the disclosures in ASC 810-10, as amended by ASU 2009-17, for all VIEs in which they hold a variable interest or for which they are the primary beneficiary — regardless of whether the entity qualifies for the deferral. Question How should a reporting entity determine which consolidation model is appropriate under ASC 810-10? 1While ASC 810-10 primarily focuses on the voting interest model and the VIE model, it also discusses consolidation of entities controlled by contract. Although the guidance in the Consolidation of Entities Controlled by Contract subsection applies to all entities (except entities that are determined to be VIEs), the context of the guidance is physician practice management entities. 6 Answer When determining which c onsolidation model to apply, a reporting entity should consider the following flowchart: Does one of the scope exceptions in ASC 810-10-15-12 or 15-17 apply? No Does the potential VIE and the reporting entity’s interest in the potential VIE meet the deferral conditions in ASC 810-10-65-2(aa)?Yes Apply the voting interest model in ASC 810-10. Yes No Does the reporting entity have a variable interest in the potential VIE under ASC 810-10 (before the amendments by ASU 2009-17)? Yes Is the entity a VIE under ASC 81010 (before the amendments by ASU 2009-17)? Yes Determine whether the reporting entity is the primary beneficiary of the VIE under ASC 810-10 (before the amendments by ASU 2009-17). No No No Does the reporting entity have a variable interest in the potential VIE under ASC 810-10 (as amended by ASU 2009-17)? Yes No Is the entity a VIE under ASC 81010 (as amended by ASU 2009-17)? Yes Apply the voting interest model in ASC 810-10 to the entity.Determine whether the reporti ng entity is the primary beneficiary of the VIE under ASC 810-10 (as amended by ASU 2009-17)? Apply the disclosure requirements in ASC 810-10-5 (as amended by ASU 2009-17) for all VIEs in which the reporting entity holds a variable interest, regardless of whether the deferral conditions in ASC 810-10-65-2(aa) are met. If one of the scope exceptions in ASC 810-10-15-12 or 15-17 does not apply to the potential accounting parent or potential accounting subsidiary, determining whether the potential VIE and the reporting entity’s interest in the potential VIE meet the deferral conditions in ASC 810-10-65-2(aa) is the first step in the assessment of whether an entity should be consolidated.Note that this determination is performed first because the analysis of whether the reporting entity has a variable interest in the entity, the entity is a VIE, or the reporting entity is the primary beneficiary may differ depending on whether the potential VIE and the reporting entity’s i nterest in the potential VIE meet the deferral conditions in ASC 810-10-65-2(aa). After a reporting entity determines whether the deferral criteria are met, determining whether an entity is a VIE is the next step in assessing whether an entity should be consolidated. Even a company with wholly owned consolidated subsidiaries must determine whether any of its subsidiaries (as well as any interests it may have in other entities) are VIEs.Note that because of a change in facts and circumstances, a potential VIE and the reporting entity’s interest in a potential VIE that initially met the deferral conditions in ASC 810-10-65-2(aa) may subsequently lose the ability to apply the deferral. In this situation, ASU 2009-17 becomes effective for the potential VIE and the reporting entity’s interest in the potential VIE. If a reporting entity must consolidate an entity that no longer qualifies for the deferral, the assets, liabilities, and noncontrolling interests of the VIE shoul d be measured in accordance with ASC 810-1030-1 through 30-6. Once a reporting entity applies the amendments of ASU 2009-17 to the potential VIE, it cannot subsequently requalify for the deferral conditions in ASC 810-10-65-2(aa). 7 ExampleEnterprise A has 60 percent of the voting interest in Entity B. Enterprise A also receives fees for providing asset management services to B. Unless one of the scope exceptions in ASC 810-10-15-12 and 15-17 applies to A (the potential accounting parent) or B (the potential accounting subsidiary), A must determine (1) whether B, and A’s interest in B, meets the conditions in ASC 810-10-65-2(aa), (2) whether A holds a variable interest or variable interests in B, and (3) whether B is a VIE. Scenario 1: If B, and A’s interest in B, meets the conditions in ASC 810-10-65-2(aa), A must determine whether B is a VIE, as defined in ASC 810-10-15-14 (before the amendments in ASU 2009-17).If A holds a variable interest, as defined in ASC 810-10 -20 and illustrated in ASC 810-10-55-16 through 55-41 (before the amendments in ASU 2009-17), in B and B is a VIE, A should assess whether it is the primary beneficiary in accordance with ASC 810-1025-38 (before the amendments in ASU 2009-17). Enterprise A should also provide the disclosures in ASC 810-10 (as amended by ASU 2009-17). Scenario 2: If B does not meet the conditions in ASC 810-10-65-2(aa), A must determine whether B is a VIE, as defined in ASC 810-10-15-14 (as amended by ASU 2009-17). If A holds a variable interest, as defined in ASC 81010-20 and illustrated in ASC 810-10-55-16 through 55-41 (as amended by ASU 2009-17), in B and B is a VIE, A should assess whether it is the primary beneficiary in accordance with ASC 810-10-25-38A (as amended by ASU 2009-17). Enterprise A should also provide the disclosures in ASC 810-10 (as amended by ASU 2009-17).Scenario 3: If B meets the conditions in ASC 810-10-65-2(aa) but is not a VIE, as defined in ASC 810-10-15-14 (before the am endments by ASU 2009-17), A should apply the voting interest model in ASC 810-10 to B. Scenario 4: If B does not meet the conditions in ASC 810-10-65-2(aa) and is not a VIE, as defined in ASC 810-1015-14 (as amended by ASU 2009-17), A should apply the voting interest model in ASC 810-10 to B. Substantive Terms and Arrangements ASC 810-10 15-13A For purposes of applying the Variable Interest Entities Subsections, only substantive terms, transactions, and arrangements, whether contractual or noncontractual, shall be considered.Any term, transaction, or arrangement shall be disregarded when applying the provisions of the Variable Interest Entities Subsections if the term, transaction, or arrangement does not have a substantive effect on any of the following: a. b. c. A legal entity’s status as a VIE A reporting entity’s power over a VIE A reporting entity’s obligation to absorb losses or its right to receive benefits of the legal entity. [Paragraph 2A] 15-13B Judgm ent, based on consideration of all the facts and circumstances, is needed to distinguish substantive terms, transactions, and arrangements from nonsubstantive terms, transactions, and arrangements. [Paragraph 2A] 1. 02 Consideration of Substantive Terms, Transactions, and Arrangements Question What is meant by â€Å"substantive terms, transactions, and arrangements† in ASC 810-10-15-13A? AnswerIn ASU 2009-17, the FASB added guidance to emphasize that when applying the provisions of the VIE subsections of ASC 810-10, a reporting entity should only consider substantive terms, transactions, and arrangements, whether contractual or noncontractual. The Board thought that it needed to add this language to avoid situations in which the form of an entity may indicate that an entity is not a VIE or that a reporting entity is not a primary beneficiary when the substance of the arrangement may indicate otherwise. Paragraph A35 in the Basis for Conclusions of Statement 167 states, in par t: The Board considered whether additional guidance was needed for determining whether a variable interest holder has power when the economics of the holder’s interest(s) or other involvements is inconsistent with its stated power from such interest(s) or other involvements.The Board agreed that an increased level of skepticism is needed in situations in which an enterprise’s economic interest in a [VIE], including its obligation to absorb losses or its right to receive benefits, is disproportionately greater than its stated power. In the Board’s view, the level of skepticism about an enterprise’s lack of power should increase as the disparity between an enterprise’s economic interest and its power increases. 8 When the provisions of ASC 810-10 (as amended by ASU 2009-17) are applied, the consolidation conclusion should not be affected by any term, transaction, or arrangement that does not truly affect the reporting entity’s power or rights to receive benefits or obligations to absorb losses.A reporting entity should use judgment, based on consideration of all the facts and circumstances, to distinguish substantive terms, transactions, and arrangements from nonsubstantive terms, transactions, and arrangements. To further emphasize this point, the SEC has reminded registrants of the staff’s skepticism about accounting conclusions that do not conform to the economic substance of the arrangement. For example, in remarks regarding the implementation of ASU 2009-17 before the 2009 AICPA National Conference on Current SEC and PCAOB Developments, Arie Wilgenburg, a professional accounting fellow in the SEC’s Office of the Chief Accountant, discussed the following examples: [A]ssume a company has transferred assets to a structure to be managed by a third party, but the anager’s equity interest in the structure is minimal and appears to be guaranteed given the management fee structure. In addition, assume t he manager can be removed by the reporting enterprise if the manager’s performance is unsatisfactory. The combination of the above factors indicates that the company may not have relinquished control; rather the manager may simply be acting as an agent on behalf of the reporting enterprise. We have also seen other, similar structures that include a buy-sell clause rather than a removal right, as a mechanism for dissolving the structure. However, if the manager does not have the financial ability to exercise its rights under the buy-sell provision, the substance of this provision may be a call option by the transferor.Again, this may be an indication that the manager is simply acting as an agent on behalf of the reporting enterprise. At the same conference, James Kroeker, chief accountant in the SEC’s Office of the Chief Accountant, indicated that the staff would consider involving the Division of Enforcement if it becomes aware of arrangements such as those discussed b y Mr. Wilgenburg. Scope and Scope Exceptions ASC 810-10 15-12 a. b. c. d. e. The guidance in this Topic does not apply in any of the following circumstances: An employer shall not consolidate an employee benefit plan subject to the provisions of Topic 712 or 715. [Subparagraph superseded by Accounting Standards Update No. 009-16] [Subparagraph superseded by Accounting Standards Update No. 2009-16] Investments accounted for at fair value in accordance with the specialized accounting guidance in Topic 946 are not subject to consolidation according to the requirements of this Topic. A reporting entity shall not consolidate a governmental organization and shall not consolidate a financing entity established by a governmental organization unless the financing entity meets both of the following conditions: 1. 2. Is not a governmental organization Is used by the business entity in a manner similar to a (VIE) in an effort to circumvent the provisions of the Variable Interest Entities Subsec tions. [Paragraph 4] 5-17 The following exceptions to the Variable Interest Entities Subsections apply to all legal entities in addition to the exceptions listed in paragraph 810-10-15-12: a. Not-for-profit entities (NFPs) are not subject to the Variable Interest Entities Subsections, except that they may be related parties for purposes of applying paragraphs 810-10-25-42 through 25-44. In addition, if an NFP is used by business reporting entities in a manner similar to a VIE in an effort to circumvent the provisions of the Variable Interest Entities Subsections, that NFP shall be subject to the guidance in the Variable Interest Entities Subsections. Separate accounts of life insurance entities as described in Topic 944 are not subject to consolidation according to the requirements of the Variable Interest Entities Subsections.A reporting entity with an interest in a VIE or potential VIE created before December 31, 2003, is not required to apply the guidance in the Variable Interest Entities Subsections to that VIE or legal entity if the reporting entity, after making an exhaustive effort, is unable to obtain the information necessary to do any one of the following: 1. 2. 3. Determine whether the legal entity is a VIE Determine whether the reporting entity is the VIE’s primary beneficiary Perform the accounting required to consolidate the VIE for which it is determined to be the primary beneficiary. b. c. 9 ASC 810-10 (continued) This inability to obtain the necessary information is expected to be infrequent, especially if the reporting entity participated significantly in the design or redesign of the legal entity. The scope exception in this provision applies only as long as the reporting entity continues to be unable to obtain the necessary information.Paragraph 810-10-50-6 requires certain disclosures to be made about interests in VIEs subject to this provision. Paragraphs 810-10-30-7 through 30-9 provide transition guidance for a reporting entity t hat subsequently obtains the information necessary to apply the Variable Interest Entities Subsections to a VIE subject to this exception. d. A legal entity that is deemed to be a business need not be evaluated by a reporting entity to determine if the legal entity is a VIE under the requirements of the Variable Interest Entities Subsections unless any of the following conditions exist (however, for legal entities that are excluded by this provision, other generally accepted accounting principles [GAAP] should be applied): 1.The reporting entity, its related parties (all parties identified in paragraph 810-10-25-43, except for de facto agents under paragraph 810-10-25-43(d)), or both participated significantly in the design or redesign of the legal entity. However, this condition does not apply if the legal entity is an operating joint venture under joint control of the reporting entity and one or more independent parties or a franchisee. The legal entity is designed so that substan tially all of its activities either involve or are conducted on behalf of the reporting entity and its related parties. The reporting entity and its related parties provide more than half of the total of the equity, subordinated debt, and other forms of subordinated financial support to the legal entity based on an analysis of the fair values of the interests in the legal entity.The activities of the legal entity are primarily related to securitizations or other forms of asset-backed financings or single-lessee leasing arrangements. 2. 3. 4. A legal entity that previously was not evaluated to determine if it was a VIE because of this provision need not be evaluated in future periods as long as the legal entity continues to meet the conditions in (d). [Paragraph 4] Overall Scope Considerations 1. 03 Application of the VIE Model in ASC 810-10 to Non-SPEs Question Does the VIE model in ASC 810-10 apply only to SPEs? Answer No. ASC 810-10-15-12 and 15-17 provide scope exceptions for cer tain reporting entities and potential VIEs.Variable interest holders should evaluate all entities that do not fall under these scope exceptions (such entities may include limited partnerships, joint ventures, cooperatives, and trusts) to determine whether they represent VIEs. (For more information about the determination of which consolidation model to apply, see Q&A 1. 01. ) Note that ASU 2009-16 eliminated the scope exception for QSPEs. Therefore, transferors, sponsors, and investors in QSPEs should consider the consolidation and disclosure provisions in ASC 810-10. (For more information about the elimination of the QSPE scope exception, see Q&A 1. 07. ) 1. 04 Qualification of a SPE as a Voting Interest EntityIf an SPE is a VIE, it is subject to consolidation under the VIE model in ASC 810-10. Question Are all SPEs automatically considered VIEs and within the scope of the VIE model in ASC 810-10? Answer No. An SPE can qualify as a voting interest entity and therefore be outside th e scope of the VIE model in ASC 81010. To determine whether the SPE is outside the scope of the VIE model, a reporting entity must evaluate the SPE under ASC 810-10-15-14. To not be a VIE, such an entity must fail to satisfy all conditions in ASC 810-10-15-14. Demonstrating only that an entity possesses one attribute of a voting interest entity, as described in ASC 810-1015-14 (e. g. simply having sufficient equity investment at risk, giving the equity holders voting rights with respect to activities of the entity), is not sufficient evidence that an entity is not a VIE. 10 If an entity is outside the scope of the VIE model in ASC 810-10, it should be considered for consolidation under the voting interest model in ASC 810-10. 1. 05 Application of the VIE Model in ASC 810-10 to Multitiered Legal Entity Structures Question In an ownership structure in which multiple layers of legal entities exist, should a reporting entity apply the VIE model in ASC 810-10 to each of its subsidiaries on a consolidated or nonconsolidated basis? AnswerIn a multitiered legal-entity structure, a reporting entity should generally begin its evaluation at the lowest-level entity. Each entity within the structure should then be evaluated on a consolidated basis. The attributes and variable interests of the underlying consolidated entities become those of the parent company upon consolidation. When a reporting entity applies the VIE model in ASC 810-10 to a consolidated entity, it should analyze the design of the consolidated entity, including an analysis of the risks of the entity, why the entity was created (e. g. , the primary activities of the entity), and the variability the entity was designed to create and pass along to its interest holders (see ASC 810-10-25-21 through 25-36).Note that there are situations in which a reporting entity may â€Å"look through† a holding company and in which it therefore would not be required to examine the structure on a consolidated basis. F or more information, see Q&A 1. 06. Example 1 Two investors each hold 50 percent of the ownership interests in Company H. Company H has 100 percent of the ownership interests in Entity X and consolidates X. Entity X is a business as defined in ASC 805 and represents substantially all of H’s consolidated activities and cash flows. On a nonconsolidated basis, H does not meet the definition of a business in ASC 805. There are no other relationships or agreements between the investors, H, or X.As noted above, the attributes of a consolidated entity become the attributes of the parent company. In this example, X’s attributes become those of H. When the investors are evaluating their ownership interests, they should consider H’s design on a consolidated basis. Because X meets ASC 805’s definition of a business and its activities and cash flows represent substantially all of H’s consolidated activities and cash flows, H also meets ASC 805’s definit ion of a business. Before applying the business scope exception, the investors must first determine whether any of the four conditions in ASC 810-10-1517(d) exist for H’s consolidated activities and cash flows. If so, the business scope exception cannot be applied.A holding company that has ownership interests in a single entity in multitiered structures should also consider the guidance in Q&A 1. 06. Example 2 Two investors each hold 50 percent of the ownership interests in a holding company. The holding company has 100 percent of the ownership interests in Entity E and consolidates E. Entity E meets ASC 805’s definition of a business and represents substantially all of the holding company’s consolidated activities and cash flows. The holding company also consolidates Entity N, which does not meet ASC 805’s definition of a business. Other than its investments in E and N, the holding company has no assets, liabilities, or activities. There are no other re lationships or agreements between the investors, the holding company, E, or N.As in Example 1, the attributes of the consolidated entity become those of the parent company. In this example, the attributes of E and N become those of the holding company. When the investors are evaluating their ownership interests, they should consider the holding company’s design on a consolidated basis. Because substantially all of the holding company’s consolidated activities and cash flows are derived from E, the holding company meets ASC 805’s definition of a business. Before applying the business scope exception, the investors must first determine whether any of the four conditions in ASC 810-10-15-17(d) exist for the holding company’s consolidated activities and cash flows.If so, the business scope exception cannot be applied. 11 Example 3 An investor holds 50 percent of the ownership interests in a holding company. The holding company consolidates the following two e ntities, both of which meet ASC 805’s definition of a business: †¢ †¢ EntityJ,anoperatingentity. EntityL,whoseonlyassetisabuildingthatisleasedtotheinvestor. Entity L’s activities and cash flows represent substantially all of the holding company’s activities and cash flows. Other than its investments in J and L, the holding company has no assets, liabilitie

Defining And Analysing Green Chemistry Environmental Sciences Essay

Our environment, which is endowed by nature, needs to be protected from of all time increasing chemical pollution associated with modern-day life styles and emerging engineerings. India, 2nd largest manufacturer of pesticides and ranked 12th in pharmaceutical production, is fast rising as top 5 participant in selected petrochemicals. The challenge for the establishment and industries is to come together and prosecute development in the field of greenish chemical science by cut downing or extinguishing the usage and coevals of risky substances. We have organized a national and an international symposium for advancing Green Chemistry in India, which has provided the platform for interaction of constructs among the taking scientist. Furthermore a refresher class of three hebdomads for college instructors on eco-friendly chemical science has besides been organized earlier to advance consciousness and facilitate instruction preparation and the pattern of green chemical science in academic establishments. The chief thought buttocks is to trip work towards green chemical science for which engagement of academic, industrial, governmental and non-governmental organic structures is needed jointly which will assist the designing and development of environment friendly chemical science patterns in India. ent enterprises. Introduction Green chemical science: – Green chemical science may be defined as the innovation, design, and application of chemical merchandise and procedure to cut down the eliminate the usage and coevals of risky substances. Therefore, green chemical science is a tool non merely for minimising the negative impact of those processs aimed at optimising efficiency, although clearly both impact minimisation and procedure optimisation are legitimate and complementary aims of the topic. Green chemical science, nevertheless, besides recognizes that there are important effects to the usage of risky substances, runing from regulative, managing and conveyance, and liability issues, to call a few. To restrict the definition to cover with waste merely, would be to turn to lone portion of the job. Green chemical science is applicable to all facets of the merchandise life rhythm as well.A Finally, the definition of green chemical science includes the term â€Å" risky † . It is of import to observe that green chemical science is a manner of covering with hazard decrease and pollution bar by turn toing the intrinsic jeopardies of the substances instead than those fortunes and conditions of their usage that might increase their hazard. Green chemical science is non complicated although it is frequently elegant. Green chemical science applies to any type of chemical science such as organic chemical science, inorganic chemical science, bio chemical science, analytical chemical science and even physical chemical science. Green chemical science is chiefly for industrial country. The chief end of green chemical science is to minimising the jeopardy and maximising the efficiency of any chemical pick. Green chemical science can be applies on organic chemical science, physical chemical science, inorganic chemical science, analytical chemical science and biochemistry. Chiefly green chemical science focuses on industrial applications. The chief end of green chemical science is to minimising the jeopardy and maximising the efficiency of any chemical pick. Principles of green chemical science: – There are 12 rules of green chemical science. It is better to forestall waste than to handle or clean up waste after it is formed. Man-made methods should be designed to maximise the incorporation of all stuffs used in the procedure into the concluding merchandise. Wherever operable, man-made methodological analysiss should be designed to utilize and bring forth substances that possess small or no toxicity to human wellness and the environment. Chemical merchandises should be designed to continue efficaciousness of map while cut downing toxicity. The usage of subsidiary substances ( dissolvers, separation agents, etc. ) should be made unneeded whenever possible and innocuous when used. Energy demands should be recognized for their environmental and economic impacts and should be minimized. Man-made methods should be conducted at ambient temperature and force per unit area. A natural stuff or feedstock should be renewable instead than consuming whenever technically and economically operable. Unnecessary denationalization ( barricading group, protection/ deprotection, impermanent alteration of physical/chemical procedures ) should be avoided whenever possible. Catalytic reagents ( every bit selective as possible ) are superior to stoichiometric reagents. Chemical merchandises should be designed so that at the terminal of their map they do non prevail in the environment and make interrupt down into innocuous debasement merchandises. Analytic methodological analysiss need to be farther developed to let for existent clip, in-process monitoring and control before the formation of risky substances. Substances and the signifier of a substance used in a chemical procedure should be chosen to minimise the potency for chemical accidents, including releases, detonations, and fires. The term Green Chemistry, coined by staff at the US EPA in the 1990s, helped to convey focal point to an increasing involvement in developing more environmentally friendly chemical procedures and merchandises. An rating of how green a chemical reaction or a chemical procedure is seems to be best done in footings of the 12 rules that have been advocated by Anastas and Warner. These dogmas deal with cardinal issues such as pollution bar, atom economization and toxicity decrease. The kernel of the 12 rules may be summarized as follows: Waste bar alternatively of waste clean-up, atom economic system as an of import concern, design of environmentally friendly man-made methodological analysiss, design of safer chemicals, redundancy of subsidiary substances, preservation of energy, usage of renewable feedstock, decrease of unneeded derivatization, catalytic reactions alternatively of stoichiometric 1s, adulteration of concluding merchandises after the terminal of their map, real-time analysis for pollution bar and schemes for chemical accident bar. Sustainable development- Sustainability in scientific discipline and engineering Begins when we start believing how to work out a job or how to turn scientific discipline into engineering. Chemistry, as the scientific discipline of affair and its transmutation, plays a cardinal function in this procedure and is the span between natural philosophies, stuff scientific disciplines and life scientific disciplines. Merely chemical procedures, which have reached – after careful optimisation – a maximal in efficiency, will take to more sustainable merchandises and production. Scientists and applied scientists, who invent, develop and optimise such procedures, hence play a cardinal function. Their consciousness, creativeness and looking in front is needed to convey reactions and chemical procedures to maximal efficiency. The term â€Å" Green Chemistry † has been coined for attempts towards this end. Atom economic system: – Atom economic system means maximising incorporation of stuff from the get downing stuffs or reagents into the concluding merchandises. It is basically pollution bar at molecular degree. For illustration, a chemist practising atom economic system would take to synthesis a needful merchandise by seting together basic edifice blocks, instead than by interrupting down a much larger get downing stuff and flinging most of it waste. Atom economic system is an of import development beyond the traditionally taught construct of percent output. Barry Trost, from Stanford University, published the construct of atom economic system in scientific discipline in 1991. In 1998 received the president green chemical science challenged award for his work. Atom economic system answers the basic inquiry, â€Å" how much of what you put into your pot terminal up in your merchandise † . Calculation of Atom Economy Chemical reactions in green chemistry- There are two types of reactions- Atom economic reactions. Atom un-economic reactions. In atom economic reactions there are another two type reactions Rearrangement reactions. Addition reactions. In atom un-economic reaction there are three type of reactions Substitution reaction. Elimination reaction. Witting reaction. Reducing toxicity- One of the underpinning rule of green chemical science is to plan chemical merchandise and procedure that usage and bring forth less risky stuffs. Here risky screen all facets, including toxicity, flammability, detonation potency, and environmental continuity. A jeopardy can be defined as state of affairs that may take to harm, whilst hazard is the chance that injury will happen. From the point of position injury being caused by exposure to the chemical. Hazard = Green analytical chemistry- The relationship between green chemical science and analytical chemical science can be treated in two ways. Analytic chemical science is a capable to command and warrant green chemical science. This is where analytical chemical science is an efficient tool for verification of the green consequence of a chemical merchandise or engineering. On the other manus, chemical analysis methods need dissolvers, reagents, and energy, and they generate waste. The rules of green chemical science, suggested by Anastas and Warner, are straight related to analytical chemical science every bit good, the most of import of them being bar of waste coevals ; safer dissolvers and aides ; design for energy efficiency ; and Safer chemical science to minimise the potency of chemical accidents. In this manner, analytical chemical science becomes an object of application of the rules of green Chemistry, and can be the mark of a green chemical science attack likewise to other countries of chemical science and chemical engineering. The term â€Å" green analytical chemical science † has been proposed by J. NamiesA?nik in that several facets of doing analytical chemical science greener were discussed. The development of instrumental methods to replace wet chemical science in sample readying and intervention is a general tendency in analytical chemical science. Here, the chief analytical consequence is related to an addition of analysis dependability, higher preciseness, and clip economy, which really positively combines with a significant decrease of waste. In most instances, the consequence of instrumental methods in analysis is a lessening in sample volume needed for analysis. Particular attempts to incorporate micro fluidics and processing in micro graduated table can well diminish the sample sum and attach toing coevals of waste. In some instances, there is a pick of direct techniques of analysis ( different laser-spectroscopic methods ) or solvent less procedures of analysis, which are green procedures. However, in most instances, the samples under survey are really complicated mixtures with interfering matrices non leting the usage of waste less method. The hunt for alternate dissolvers is an of import measure on the manner of utilizing greener methods. In This procedure, the chief mark should be non merely the replacing, but debut of an extra advantage from different belongingss of these dissolvers to better the selectivity, sensitiveness, and dependability of analysis, every bit good as cut down analysis clip. The development of instrumental methods in general leads to an efficient usage of energy, particularly when the method is extremely automated and uses a minimum sum of sample. The word division of several methods for sample intervention and separation of constituents or integrating of separation and complicated methods of sensing enables an efficient usage of energy. Additional energy economy is possible when a microwave intervention or even merely micro-cook warming is incorporated into the procedure. An supersonic irradiation may besides hold a strong consequence on several sample interventions. The development of photochemical methods is a extremely green manner in analytical chemical science every bit good. Most of the above-named processs besides result in safer chemical science. In many instances of sample readying and intervention, different chemical methods for derivatization and chemical alteration of samples are still used. The hunt for less toxic compounds and procedures with decreased waste coevals should be an purpose in the development of new methods. What can green chemical science make? Green chemical science is non a peculiar set of engineerings, but instead an accent on the designA of chemical merchandises and processes.A Sometimes, green chemical science takes topographic point at the molecular degree to cut down or extinguish the usage and coevals of risky substances. This attack offers environmentally good options to more risky chemicals and procedures, and therefore promotes pollution bar. Green chemical science can take to dramatic alterations in how we interact with chemicals on a day-to-day footing as in the instance of theA 2005 Nobel Prize in Chemistry for the development of the metathesis method in organic synthesis. â€Å" The word metathesis means ‘change-places ‘ . In metathesis reactions, dual bonds are broken and made between C atoms in ways that cause atom groups to alter topographic points. This happens with the aid of particular accelerator molecules. Metathesis can be compared to a dance in which the twosomes change spouses. Metathesis is used daily in the chemical industry, chiefly in the development of pharmaceuticals and of advanced plastic stuffs. Thankss to the Laureates ‘ parts, synthesis methods have been developed that are more efficient ( fewer reaction stairss, fewer resources required, less wastage ) , simpler to utilize ( stable in air, at normal temperatures and force per unit areas ) , and Environmentally friendlier ( non-injurious dissolvers, less risky waste merchandises ) . This represents a great measure frontward for ‘green chemical science ‘ , cut downing potentially risky waste through smarter production. Metathesis is an illustration of how of import basic scientific discipline has been applied for the benefit of adult male, society and the environment. † The chief inquiry is that Why Green Chemistry? Green chemical science is effectual in cut downing the impact of chemicals on human wellness and the environment. In add-on, many companies have found that it can be cheaper and even profitable to run into environmental ends. Net incomes derive from higher efficiency, less waste, better merchandise quality, and decreased liability. Many environmental Torahs and ordinances target risky chemicals, and following all these demands can be complicated. But green chemical science allows companies to follow with the jurisprudence in much simpler and cheaper ways. Finally, green chemical science is a cardinal science-based attack. Addressing the job of jeopardy at the molecular degree, it can be applied to all sorts of environmental issues. Since 1991, there have been many progresss in green chemical science, in both academic research and industrial execution. For illustration, Spinosad, an insect powder manufactured by fermenting a of course happening dirt being, was registered by the EPA as a reduced-risk insect powder in 1997. Spinosad does non leach, bioaccumulation, volatilise, or persist in the environment and in field trials left 70 to 90 per centum of good insects unharmed. It has a comparatively low toxicity to mammals and birds and is somewhat to reasonably toxic to aquatic beings, but is toxic to bees until it dries. In another progress, an industrial cleansing dissolver, ethyl lactate, made from cornflour and soybean oil was patented in 2000 and is competitively priced with petrochemical dissolvers. It biodegrades to carbon dioxide and H2O and has no known harmful effects for the environment, worlds, or wildlife. These progresss, nevertheless, represent an highly little fraction of the possible applications of green chemical science. Because the merchandises and processes that form the footing of the economic system and substructure are based on the design and use of chemicals and stuffs, the challenges confronting this field are tremendous. What is the function of chemist in green chemical science? Chemist can utilize his cognition of green chemical science and its benefits to warrant research into ‘cleaner and greener ‘ procedure. In most instances it is readily incontrovertible that green chemical science attack affecting decrease of waste, stuff and energy, will besides take to be decreases and that this in bend will hold a positive consequence on profitableness. In academia enterprises such as the technology and physical scientific disciplines research council ( EPSRC ) Clean Technology Programme and the authorities ‘s sustainable engineering enterprise have already encouraged professionals to come in this country. Although many of the engineerings or tools required to do chemical fabrication more sustainable are available, and so industry already doing important advancement, much more can be achieved. In order to travel frontward chemist demand to understand, and get the better of the barrier s, both existent and perceived, that exist to innovation in this country. In some instances a civilization alteration may be required before the possible fiscal benefits are to the full appreciated. Professional chemist besides have a major function in assisting to promote all interested parties, including industry, clients, force per unit area groups, authorities, educationist and research workers, to co-operate to guarantee a cleaner and more sustainable hereafter. Graph of published articles in journals- Examples of green chemistry- Lead-free solders and other products- Breakthroughs in the replacing of lead include usage of new soldering stuffs, options to take additives in pigment and the development of cleaner batteries. Bioplastics – Plastics made from workss, including maize, murphies or other agricultural merchandises, even agricultural waste, are an of import illustration of green chemical science. Merchandises already available are forks, knives and spoons made from potato amylum and biodegradable packaging made from maize. Fire immune materials-Plastics that do non necessitate the usage of fire retardents are a solution to the job of toxic fire retardents. A combination of polylactic acid and kenaf-two agriculturally products-has already been developed for this intent. Halogen-free fire retardants- For merchandises that still require the usage of fire retardents, green chemical science can assist place new, less toxic options. For illustration, silicone based stuffs can be used. Biopesticides besides the good illustration of green chemistry- Biopesticides offer powerful tools to make a new coevals of sustainable agribusiness merchandises. They are the most likely beginning for options to some of the most debatable chemical pesticides presently in usage. Biopesticides besides offer solutions to concerns such as pest opposition to traditional chemical pesticides, public concern about side effects of pesticides on the environing environment and finally, on human wellness. Examples of Investigatory Projects in Green Chemistry- Effectss of Detergent Phosphates on Plant GrowthBecause phosphates from family detergents seep into groundwater, a fake consequence can be investigated utilizing a immature pea works and a solution of 90-percent H2O to 10-percentA laundry detergentA solution. Use two containers of pool H2O to imitate phosphate ‘s catalytic consequence on algae growing by adding detersive solution to one container intermittently and utilizing an unchanged container as a control. Record all observations qualitatively and quantitatively.Consequence of Pollution on BiodiversityUse several terrariums made from local beings, dirts and H2O to look into how pollution affects the sum of biodiversity in an ecosystem. Pollute terrariums by spraying diluted sulfuric acid into a terrarium to stand for acerb rain. Pollute another terrarium by carefully firing a birthday candle indoors daily to stand for smog. Leave one terrarium unpolluted to utilize as a control group. Record all observations qualitatively and quantitatively.Storm Water Geologically Filtered After a difficult rain, H2O hastes into local waterways transporting many pollutants. Contaminated H2O can be created by blending H2O with little objects and dark colored soil to stand for different types of pollution. Invent a system of filtration utilizing different sized grains of dirt to make state of affairss of altered porousnesss and permeableness. Record all effects on pollution filtration qualitatively and quantitatively. Future products- PVC free cablesA -will cut down the usage of both PVC and of lead, which is used as a stabilizer in PVC cabling. The Toxic Use Reduction Institute has been working on this new solder. New nonleaded soldersA with lower heat demands are being developed. Our new merchandise development will concentrate on: aˆ? Polymeric solutions, large molecules aˆ? Reactive merchandises that become edge to the concluding polymer aˆ? Non-toxic little molecules aˆ? Mineral merchandises aˆ? Minimizing the life rhythm of merchandises that remain in the environmentA aˆ? Improving recyclability aˆ? Implementing steps throughout the supply concatenation to minimise emanations of relentless compounds aˆ? Engaging distributers, clients and rivals in plans, such as VECAP, to extinguish all harmful merchandises from the environment aˆ? Continuing to rede consumers of the of import of sustainable merchandises. Some basic ways in which we go about green merchandise development – Choice of reagents with lowest toxicity Choice of accelerators that would supply highest reaction output, therefore minimising waste Choosing the right signifier of energy to maximise reaction efficiency Precise computations to foretell with merely two to three experiments how the reaction can be optimized, every bit good as the two or three preferred dissolvers for that reaction Designation of possible jeopardies before carry oning the reaction. Specific parametric quantities such as heat of the reaction are studied. Valuess of Green Chemistry in Innovation, Application and Technology: Indian Scenario- Green chemical science focuses on the decrease, recycling, and/or riddance of the usage of toxic and risky chemicals in production procedures by happening originative, alternate paths for doing the coveted merchandises that minimize the impact on the environment. Green chemical science is a more eco-friendly green option to conventional chemical science patterns. The green chemical science motion is portion of a larger motion finally taking to a green economy- viz. sustainable development, sustainable concern and sustainable life patterns. Green chemical science can lend to accomplishing sustainability in three cardinal countries. First, renewable energy engineerings will be the cardinal pillar of a sustainable high-technology civilisation. Second, the reagents used by the chemical industry. Third, fouling engineerings must be replaced by benign options. The purpose of the article is to introduce the academicians, research workers, scientists and applied scientists with values and po sitive impact of green Chemistry in invention, application and Technology. The green chemical science moving ridge has reached our state excessively. We need to work for its improvement by promoting the patterns of green chemical science. Collaborations between industrial and academic spouses are of import to hasten the transportation of important green merchandises to the market place. For such coactions to be successful, persons in these two otherwise motivated civilizations need to work together to progress green scientific discipline. Governments could doubtless ease formation of more effectual industrial/academic partnerships. Under an understanding with the Green Chemical Institute, University of Delhi has been accepted as an international chapter. The Indian chapter will advance green chemical science through instruction, information aggregation and airing, research and international coaction via conferences, workshops, meeting and symposia.A In India, although there is turning awareness about the sick effects of pollution, publicity of continual debut of environmentally friendly merchandises a methodological analysiss in the chemical industry needs to be furthered. Use of nonconventional engineerings is extremely popular in India. First in this list is the use of microwaves. Further, the microwave chemists are turning their attending toward microwave-assisted dry-media reactions in order to minimise solvent use, an added advantage to already established microwave chemical science. In add-on to microwave-assisted reactions, supersonic and photochemical reactions are besides used as nonconventional reaction engineering. Analytic chemical science has been at the centre of the green chemical science motion. Progresss in analytical chemical science are cardinal to environmental protection. In India, the focal point for analytical chemical science is chiefly on extraction engineerings such as solid stage, ultrasound and microw ave, supercritical fluid extraction, and automated soxhlet extraction. Monitoring and analysis of heavy metals and pesticides is really of import for an agro economy-based state like India and main governmental institutes like the Indian Agricultural Research Institute ( IARI ) and the Defense Research and Development Organization ( DRDO ) are working extensively in this field. Further removing of these elements from industrial and agrochemical use is of premier importance for these. Some recent developments and illustrations in green chemistry- Chemists from all over the universe are utilizing their originative and advanced accomplishments to develop new procedures, man-made methods, analytical tools, reaction conditions, accelerators, etc. under the new green chemical science screen. Some of these are. A uninterrupted procedure and setup converts waste biomass into industrial chemicals, fuels and carnal provender. Another procedure converts waste biomass such as municipal solid waste, sewerage sludge, plastic, tyres and agricultural residues to utile merchandises, including H, ethyl alcohol and acetic acid. A method for mass bring forthing taxol by semi uninterrupted civilization of Taxus genus works. A agitation method for the production of carboxylic acids. A method of partly oxidising intoxicant such as methyl alcohol to quintessences, aldehydes, esters or acids, by utilizing a supercritical fluid Mobile. A procedure for bring forthing a fluoropolymer by utilizing supercritical C dioxide. A cost-efficient method of bring forthing ethyl lactate, a non-toxic dissolver derived from maize. A scope of ‘organic dissolvers ‘ that are worker friendly and environmentally sound. A new environmentally friendly engineering in assorted metals recovery from exhausted acid wastes has been used to retrieve Zn and ferric chloride from pickle spirits. The demand for non-ionic wetting agents is turning and a new illustration of this is alkyl glycoside, which is made from carbohydrate. This merchandise can be used as a replacing for alkyl aryl sulphonate anionic wetting agents in shampoos. Sodium silicate can be used as a more environmentally benign replacing for phosphorus-containing additives in rinsing pulverization. Three coconut oil soap bases for liquid cleaning applications have been developed. One of these merchandises has really light colour and low olfactory property, doing it suited for presenting dyes and aromas. Feedstock recyclingA of plastic wastes into valuable chemicals utile as fuels or natural stuffs. Developing States and Green Chemistry- In developing states, the debut of green chemical science is still in a phase of babyhood, despite the important demand and the important function green chemical science can play. Many of the patterns in developing states are still far from the constructs of safety, pollution bar and design of energy efficiency. Environmental pollution and waste coevals are some of the hurting jobs many developing states are enduring from. Many of the grounds behind these jobs lie in policies and schemes adopted that are based on end-of pipe intervention, instead than pollution bar at beginning or implementing life rhythm believing in managing waste jobs. Most often, income coevals activities are dependent on an efficient usage of energy and other resources such as H2O, which may present some serious jobs to future coevalss. The United Nations coverage on the millenary development ends at a state degree indicated a high degree of energy ingestion and limited energy resources in most of the developing states. The study strongly recommends the imperative demand to ration the usage of energy resources in these states and to implement energy preservation policies. The same tendency of troubles developing states face has been illustrated in the series of state studies produced by the rural development at the H2O and environment section of the World Bank. Sustainable chemical science could play a polar function in salving many of the ailing conditions that many of the development states are subjected to. The usage of solar energy, debut of sustainable agriculture, recycling, and the execution of life rhythm thought and life rhythm analysis as a direction tool for some of the chronic issues such as municipal waste direction, are some few illustrations of how green chemical science can profit developing communities. Green chemical science can besides hold a really strong impact on H2O sufficiency issues in that portion of the development universe where H2O resources is the most critical issue. It is through the execution of cleaner production and usage of safe and biodegradable chemicals that a immense volume of effluent could be reused to slake the emerging, critical demand of H2O in many of these states. Government Initiatives- Government can make a batch of good for the cause of green chemical science by increasing public consciousness and by conveying and implementing rigorous environmental statute laws. One of the recent and controversial illustrations of authorities enterprise is the transition of Diesel vehicles to tight natural gas ( CNG ) in order to cut down pollution. Relocation of industries into industrial countries off from residential Parks is another bold measure taken by the Delhi authorities. Further, the authorities is besides concentrating on new undertakings such as fuel pellets from municipal waste, aspirated H-cylinder engines for light commercial vehicles ( LCVs ) , run intoing India 2000 emanation norms, battery-powered autos for pollution-free drive, H energy and energy towers for new environment-friendly fuel, development of traditional herbal drugs as adapt gens a immunomodulators. The authorities should besides increase support to promote research in green chemical science. By pre senting green chemical science instruction at all degrees, the authorities can construct a solid foundation toward green chemical science in India.