Gender wage gap Essay

Gender wage gap is defined as difference between the mens earnings and also the womens earning according to hourly earnings, annual earnings or even weekly earnings. Gender wage gap is referred to difference between an average of all male earnings and all female earning in comparison to percentage of the male earnings (Shamie, 1986). In contrary to this gender wage gap may be expressed as gender pay gap. It is identified that the gender wage gap does not consistently accustom to part time workers earnings. It is absolutely 17.5 since this is the current percentage of average earnings that is held compulsory. Reasons for gender wage gap There are reasons as to why the gender wage gap happens. These reasons include the congressional District whereby the state does not administer the stack up of the gender workers hence there are disparities encountered. The second reason explores that, people have been wondering about the gender wage gap whereby men have been getting paid much more payment than women (Hirsch, 2010). There are people perspectives which lay a foundation that women are getting paid less because they choose lower paying jobs as well as working part time than the male. In moral view, within the US a gender wage gap has already been spotted to have affected women of all ages, education levels, different races and also ethnicity. However, women have been experienced the gender wage gap even though some states are worse in gender wage gap than others. The gender wage gap has taken its place in most of the states in a way that its worse for women of color. Probably all women are affected by the gender wage gap but for the women of color are not affected so worse.

Introduction to Waste Management Essay

Over the past few years, public concern has been growing over the disposal of wastes produced by health care facilities in the Philippines. Several reports have cited large, albeit inconsistent, figures of the amount of infectious waste hospitals in Metro Manila produce daily, and little information is available on what is done with these wastes, especially after the banning of incineration in the country. More recently, these concerns have been fueled by reports that some of these wastes end up in our open dumpsites and in some cases, in rivers, leading some sectors to call for the allowing of incineration once again. Health care waste can be managed properly without the use of incinerators that produce toxic air pollutants that pose threat to human health and environment. To begin with, not all of the wastes produced by hospitals are infectious or hazardous. With proper management and the use of well-known solid waste management tools such as segregation and recycling, the portion of a hospital’s waste stream that poses risk to human and environmental health need not be cause of public fear. According to the World Health Organization (WHO), in 2000, 21 million people all over the world were infected with the hepatitis B virus due to injections with contaminated syringes. Another 2 million people were infected with the hepatitis C virus due to the same cause, and about 260,000 were infected with HIV. Ironically, all these people acquired diseases as a result of the practices of the very institutions that should be protecting their health. The sheer nature of providing health care, unfortunately, creates wastes that can pose serious environmental and health risks to health care workers, waste handlers, and even waste pickers. This, however, is the case only if the wastes produced by health care facilities are not managed properly. In 2002, though, a WHO assessment conducted in 22 developing countries showed that 18% to 64% of health care facilities do not use proper waste disposal methods. While most of the waste produced by health care facilities is not any more dangerous than regular household waste, some types do represent a higher risk to health. According to the WHO, these include infectious waste (15% to 25% of total healthcare waste), among which are sharps waste (1%), body part waste (1%), chemical or pharmaceutical waste (3%), and radioactive and cytotoxic waste or broken thermometers (less than 1%). Improperly managed and disposed, these wastes can expose health care workers and the public to risk of infections. In order to fulfill the medical ethic to â€Å"first do no harm†, the health care industry has a responsibility to manage waste in ways that protect both the public and the environment. Poor management of health care waste potentially exposes health care workers, waste handlers, patients and community at large to infection, toxic effects and injuries, and risks for polluting the environment. It is essential that all medical waste materials are segregated at the point of generation, approximately treated and disposed of safely. The purpose of this study is to have a practical understanding and to raise the lore of the patients and so as their significant others regarding the significance and essentiality of proper health care waste management, and also to raise the quality of the health care environment.

THE LAW OF PROPERTY Essay Example | Topics and Well Written Essays - 1000 words

THE LAW OF PROPERTY - Essay Example Further, he also cannot act independent of the landlord, in any matter connected with the tenancy. All his rights and obligations stem from his contractual agreement with the landlord, which could be terminated by either party, by giving suitable notice as determined by the agreement. There are certain characteristics of licences, which are as follows: 1. Cancellation of the Licence. The cancellation of a licence is always possible, as was seen in the decided case law of Wood v Lead bitter (1845). The facts were that the plaintiff, A, brought a case of alleged assault against the defendant. The plaintiff was in Doncaster Race course with a ticket. He was asked to move out but he did not, and challenged the cancellation of his licence. It was held that â€Å"licence by A to hunt in his park, whether given by deed or by parole, is revocable; it merely renders the act of hunting lawful, which, without the licence, would have been unlawful." 2. The heirs or succeeding parties in the contract of licence would not be bound by the licence: this was seen in the decided case law- King V David Allen & Sons (bill Posting) Ltd. (1916). In this case, the plaintiff, David Allen was under contract with King’s to stick billposters on the walls of the theatre. Later, however, the ownership of King changed hands, and it was held that the right of David Allen, being a ‘personal’ right and not a ‘real’ right, could not be enforced against the succeeding Company. (Property law summary). In another case law, Clore V Theatrical Properties Ltd. (1936), the licensor A, was denied permission to sell drinks in the theatre, formerly run by D. The new owner C, refused to validate the licence given by D to A. Held, the court upheld C’s contention, and the only remedy for A was to seek redressal from D, who had assigned the licence to A.

The role of A&E physicians in health promotion with regards to Essay

The role of A&E physicians in health promotion with regards to alcohol-related problems - Essay Example Introduction: Alcohol use disorders are common conditions in clinical practice in the Accident and Emergency. It has been said that the average alcohol-dependent person decreases his or her life span by 10 to 15 years, and alcohol contributes to 22,000 deaths and 2 million nonfatal injuries each year. Of them, not infrequently, the initial encounters of many of these patients occur as presentations in the Accident and Emergency. Recent years have witnessed a blossoming of clinically relevant research regarding alcohol abuse and dependence, including information on specific genetic influences, the clinical course of these conditions, and the development of new and helpful treatments. There are many health effects that can occur with both acute and long-term or chronic use of alcohol in both males and females due to pathologic changes it can induce in several organ systems that can be permanent and irreversible. Moreover, long-term, escalating levels of alcohol intake on a habitual bas is can predispose to tolerance as well as an intense adaptation of the body to a conditioned state induced by alcohol that cessation of use can lead to a withdrawal syndrome that is usually marked by insomnia, hyperactivity of the autonomic nervous system, and feelings of intense anxiety (Department of Health, 2004, 1-6). Epidemiologic evidence suggests that the problem with alcoholism lack the stereotypical features of other substance abuse disorders mainly due to the fact that alcohol drink is considered a socially acceptable beverage, although society does not accept the excess and abuse. That which starts as a social norm may eventually turn out to be an addictive behaviour. Psychiatric manifestations apart, a history of alcoholism provides the explanation of many other health conditions that a physician may come across, more so in the Accident and Emergency, and from that point of view, awareness that

1. Interest Groups2. Political Party3. Bureaucratic Agency (Gov Essay - 1

1. Interest Groups2. Political Party3. Bureaucratic Agency (Gov. Agency) - Essay Example All the relevant and necessary information concerning this group are available in their main webpage (www.girlsnotbrides.org). As per the detailed website, some of the objectives of this group include mobilizing all the required financial and policy support to fight child marriages, enabling coordination and learning between groups working to halt early child marriages, and, importantly, creating global awareness of the damage that early child marriages portend to the individual, the community and the world at large. The group seeks to amplify the cries of girls often forced with or coerced into early marriage. The administrative and financial management of the group is the function of the Board of Trustees, whose members are equally legally responsible for the decisions and actions of the board. Aside from finance and administration, this board also safeguards the culture of the group and protects its good name. The Advisory Committee advises the Board of Trustees on the policies and strategies of the group. The Executive Director (currently Lakshmi Sundaram0 serves to ensure the group delivers on its stra tegies and draws ever closer to eliminating child marriage. Members of the group are called to exceptional commitment to good governance, accountability and transparency in the group’s goals of eradicating child marriage, work actively with other members, governments and relevant players on all levels towards realizing said goals, and contributing in any way in the group’s activities (Girls Not Brides, 1). The Girls Not Brides group received funding from donors such as the Ford Foundation, IKEA, Nike, Open Society, Skoll, the Dvaid & Lucile Packard Foundation, Kendeda, Sabanci, NoVo, Human Dignity Foundation, amongst other well-wishers (Girls Not Brides, 1). This site can be critical to one interested in politics in order that they may develop better comprehension and enlightened engagement in political processes by enabling one to know how such groups

Communication 270 Research Paper Example | Topics and Well Written Essays - 2500 words

Communication 270 - Research Paper Example Religious intolerance has been quoted as one of the major factors facilitating the growth of terrorism in the twentieth and twenty first century. Indridi Indridason, a professor of political science, University of Oxford explains that terrorism has a great impact on domestic politics as well as international politics. Using terror groups to accomplish some mischievous mandates has been a common practice in many countries since the French revolution. Understanding how the terror groups work and the strategies they use in inflicting fear and intimidating citizens is important in learning the trends that terrorism has adopted and how sophisticated and uncontrollable it is of late. This research was done to understand the working of the terror groups and the methods they use to accomplish their political ambitions and interests. As stated earlier many terror groups constitutes of individuals who are against or resisting a given rule. To prove that the given government is failing to work for the people, they engage in activities such as killing civilians to show the failure in offering security to the society. In some cases an individual who did not participate in the planning or the execution of the terror activities uses the activities to benefit his quest to lead the people. For instance in 2001, there were twin attacks in New York and Washington DC which resulted in the loss of huge numbers of innocent citizens. In the elections that followed, Bloomberg used the issue to promise people security and address the issue of terrorism thereby earning himself the position of the mayor. George Bush in the elections that followed also embarked on the issue of terrorism as one of his key agendas in his manifesto. Since the people were totally scared and a repeat of such an attack was not anything anyone would like dreaming of, anyone offering a solution could earn cheap votes. Terrorism has evolved greatly to be what it is today. In the 19th century

Ethics Research Paper Example | Topics and Well Written Essays - 2000 words

Ethics - Research Paper Example Ethics assumes that people are rationale beings, and they are free. These assumptions are critical since they affect the level of people’s moral responsibility. Ethics involves two objects, which are physical or nonphysical. In the physical object involves the doer of an action while nonphysical object consists of the act being performed by the doer. Moral acts of human are viewed as being official ethical objects, because they comprise moral values. Therefore, in each decision that man makes, either in business or government, we are always subjected to approach such issues, if they are moral judgments, or whether they are objective. Ethics entails individuals to express insights in aspects of reality, instead of sheer feelings, requirements, decisions, or conventions among others. The aspect of ethics is based on theorizing it as an issue of free and intelligent decision that seeks the intelligent fit for what is right and acceptable in society. Ethics is founded on a set of ethical and moral principles. These principles are binding to all businesses and governments and must be seriously observed. The ethical values override all human rationalism, weakness, ego and personal errors. The government and business employers are integral in ensuring that the ethical aspects of society are upheld. There are numerous values that have spurred successful corporations to the peak of the business world, as they have managed to withstand the time test, and enhanced the development of such organizations. Ethics entails that businesses should be honest in their operations, toward their customers and surrounding community. Honest businesses are always observant of set legal laws and accountable to their mission. However, dishonest businesses are locked in continuous scandals that have not only split their reputation but as well led to critics questioning their ethical relevance. By partaking in highest ethical standards businesses is entailed to embrace integrity and w hich enables them to connote their strength and stability. Businesses that exhibit integrity indicate completeness as well as soundness in a person’s temperament and that of their organization. Similarly, companies that exhibit responsibility are considered to be ethical. Those that take accountability and responsibility for their actions, helped to maximize, on respect and cohesion, in society. Responsible businesses do not blame others, claim victimhood or pass the buck and refuse to take responsibility of what they have caused. Actions indicate the ability for one to be responsible both in little and massive things; thus ensuring that ethical values are maintained (Menzel, p.21). Ethics also entails businesses to provide quality products to their customers. Quality entails more than producing the best product but should comprise every aspect of the organization’s activities. Businesses that offer quality have a profound sense of self-respect, pride in achievement, a nd thoughtfulness that influences all things. Ethic is exhibited when businesses communicate professionalism and quality. Furthermore, ethics requires businesses to be trustworthy and respectful in their operations. Trust helps companies, to attain customer confidence, in their product and business, and it becomes exceedingly hard for a business to get it back, once it is lost. Conversely, respect is considered to

Auditing Case Study Example | Topics and Well Written Essays - 1500 words

Auditing - Case Study Example Due to reluctance of tone of Societe Generale, the company had to face a loss of almost $7.2 billion in 2008. It is in this context that Societe Generale provided higher concentration on the front office activities and there was less consideration towards back office performances. As a consequence, there was imbalance between the control of front office and back office functions (Beasley, M. S. & Et. Al., â€Å"How a Low Risk Trading Caused a $7.2 billion Loss†). Due to this reason, Societe Generale was incompetent to develop acute inspections essential for controlling the roles and responsibilities of employees. From the case study, it can be observed that like other organizations, Societe Generale had also become quite determined about drumming up its market worth. Thus, it did not provide much attention towards the traders and its responsibilities for managing the risks, while it rendered high significance for financial organizations in order to maintain profitability (Wart zman, â€Å"Executives Are Wrong to Devalue Values†). According to Canadian Auditing Standard (CAS), ‘Tone at the Top’ outlines the principles of a business unit and administration’s obligation to aptitude and beliefs (Hartley, â€Å"Tips for Cost-Effective CAS Application†). Tone at the top is necessary for better financial control in any organization. By judging the tone at the top of Societe Generale it can be characterized that it had certain lacunas of internal control which can be categorized as the reason for huge loss faced by the company. For any organization, the top level administration must be clear regarding the rules of business because different organizations have different risk desires. In Societe Generale the management was unable to apply the rules of business throughout the internal working culture. There is need for better internal management which can scrutinize the activities of all employees so that any kind of illegal activit ies can be detected and prevented accordingly (Beasley, M. S. & Et. Al., â€Å"How a Low Risk Trading Caused a $7.2 billion Loss†). Question 3 CAS describes that maltreatments in the financial statements ascend from either fraudulent activities or accidental mistakes (OAS, â€Å"Canadian Auditing Standards†). Fraudulent activity comprises three aspects which are pressures or incentives, opportunity and rationalization. Pressure or incentive is the aspect which influences or tends to give reasons to an individual to conduct fraud. With respect to Jerome Kerviel (one of the traders of Societe Generale), as a trader, the earning of Kerviel was quite low in comparison with other top level traders. He even did not consider himself as a trader due to his low earnings. Thus, his incentive for conducting fraudulent activity was to enhance his reputation within the company and thus increase the bonus amount (Beasley, M. S. & Et. Al., â€Å"How a Low Risk Trading Caused a $7.2 billion Loss†). Hence, he was constrained for gaining more money by undertaking monetary risks. Rationalization is the other aspect in majority of fraud cases. It involves reconciling the behavior of the individual alleged for committing fraudulent activities. After disclosure of the fraudulent activity of Kerviel, his rationalization was to make sure that his superiors were aware regarding his activities. Kerviel had articulated that his superiors

Managing Projects Essay Example | Topics and Well Written Essays - 2750 words

Managing Projects - Essay Example Network Diagram (Activity on Node) 1 2. Network Diagram (Activity B is delayed by one day) 6 3. Network Diagram (Activity P is delayed by one day) 7 4. Network Diagram (Activity O is delayed three days) 8 LIST OF TABLES Table Title Page 1 Project Completion Date 4 Task 1 1. Network diagram (using activity on node the node) (Gido & Clement 2008) 2. Timings of the Activities and Total Float It was essential to estimate the duration and sequence of activities before a network diagram could be established to calculate the total float. For this purpose, information on amount of work and number of wok periods, types and quantities of resources and their availability was important. According to (PMBOK, 2004), a better way of handling this information is by using a project calendar and an alternative resource calendar. To estimate duration of each activity, list of all activities, duration estimating databases and other historical reference data which may be commercially available, project c alendar from organization process assets, constraints and assumptions from the project scope statement that may impact amount and duration of work, estimates of resource requirements for each activity; human resources and material and equipment requirements are critical inputs to the process of estimating activity durations (Lock, 2007). Estimation of costs and identification of risks associated with each activity help is determining the activity durations with more accuracy closer to actual. Then from the information gathered above, techniques like parametric estimation, analogous estimation, three point estimation and reserve analysis could be used to more precisely estimate the duration of activities (Lock, 2007). In parametric estimation, a mathematical model based on historical records using regression analysis or learning curve is created when there is no information as to on what basis estimation is to be based. Analogous estimation uses a similar previous activity as basis t o estimate the future activity. It is more widely used to estimate project durations rather than duration of a single activity when there is no much information regarding project is available. The probability of completing a project or activity on a single date is too less; therefore, in three point estimating, an optimistic, a pessimistic and most likely estimate is made for each activity and then activity duration is calculated either as average of these three or using a formula. When reasonable estimates of the project activities have been made, then reserve analysis is conducted to cater for risks of time and cost by adding contingency reserve and management reserve. The next process is to sequence activities into how the work would be performed considering their internal and external dependencies. The outcome of this process is a network diagram or a project schedule network diagram. In this report, we have used Precedence Diagramming Method (PDM) or Activity on Node where node s are used to represent activities and arrows show their dependencies. In our case study, we have used finish to start relationship while constructing the network diagram to show dependencies between the activities. Now to calculate the total float, critical path method was used. Once the duration of activities have been determined, dependencies between activities have been established and network diagram has been created the next step was to calculate the earliest and latest an activity can

Marketing debate Essay Example | Topics and Well Written Essays - 750 words

Marketing debate - Essay Example (Child, 1995) Product marketing is indeed of paramount importance when the comparison is drawn between the two but it is service marketing which takes the lead over its product counterpart due to a host of reasons, all of which are mentioned below. Marketing is selling a product before it has actually entered the market. By market we mean those sets of people or target audiences who will be catered this product so that they could satisfy one or more of their respective needs. With these we fathom that marketing aims not only to sell the product before it is even produced at the manufacturer’s end but also make sure that there are repeated purchases on the part of the customer who is a part of the target audience so to speak. Marketing in essence is a game plan for the strategic and tactical basis of the products that are sold through the help and facilitation of distribution channels, word of mouth approaches and formation of brand personalities and so on and so forth. People factor in the service encounter gains an even more significant position. Marketing a service is different from marketing a product because the role of employees has played an important role within an organization that is focused mainly on the delivery of state of the art service towards its customers on a day to day basis. Service marketing has remained the key for a long time, especially within the contexts where the same offers a creative edge over other service organizations – the competitors in essence. (Beckman, 1967) Service marketing is indeed different than product marketing as it pinpoints the absence of a tangible product in the first place and relies on providing the service in an impeccable way. What this does is to inculcate the same feelings of trust and belongingness with the customers which they receive when they purchase a product. However this sense of attachment with the

Tim Hortons Company Analysis Essay Example for Free

Tim Hortons Company Analysis Essay The Tim Hortons chain was founded in 1964 in Hamilton, Ontario. The chains focus on top quality, always fresh product, value, great service and community leadership has allowed it to grow into the largest quick service restaurant chain in Canada specializing in always fresh coffee, baked goods and home style lunches. The first Tim Hortons restaurants offered only two products coffee and donuts. The selection of donuts to enjoy was highlighted by two original Tim Hortons creations, the Apple Fritter and the Dutchie. They became the most popular donut choices in the 60s, and remain two of the most popular today. But as consumer tastes grew, so did the choices at Tim Hortons. The biggest change in the chains product focus took place in 1976 with the introduction of the phenomenally successful Timbit (bite-sized donut hole), today available in over 35 different varieties. The chains growth into the 1980s brought about a whole series of new product introductions: muffins (1981), cakes (1981), pies (1982), croissants (1983), cookies (1984), and soups ;amp; chili (1985). Sandwiches, which were originally introduced in 1993, were re-introduced as a new and improved line-up of 6 varieties, called Tims Own, in 1998. Also, in the 1990s, bagels (1996), flavoured cappuccino (1997), Cafe Mocha (1999) and Iced Cappuccino (1999) were introduced. In 2003, the Turkey Bacon Club sandwich and Maple Pecan Danish were successful menu additions. In 2005 Tim Hortons introduced, Yogurt amp; Berries, Cinnamon Roll and Hot Smoothee to the menu. Many new great products were added to the menu in 2006 such as the Chicken Salad Wrap and the hot Breakfast Sandwich (eggs, sausage or bacon, processed cheese on a toasted home style biscuit). The chains biggest drawing card remains its legendary Tim Hortons coffee. To ensure the coffee is always fresh, Tim Hortons serves its coffee within 20 minutes of being brewed or its not served at all. The premium blend is also available in cans, as are Tim Hortons hot chocolate and flavoured cappuccinos, allowing guests to enjoy these great tasting products at home. GLOBAL RESTAURANT SYSTEM DEVELOPMENT The first Tim Hortons restaurant was opened in 1964 by Tim Horton, a National Hockey League All-Star defenseman. In 1967, Tim Horton and Ron Joyce, then the operator of 3 Tim Hortons restaurants, became partners and together they opened 37 restaurants over the next 7 years until Tim Horton’s death in 1974. Mr. Joyce became the sole owner in 1975. In the early 1990s, Tim Hortons and Wendy’s, now owned by The Wendy’s Company (â€Å"Wendy’s†), entered into a partnership to develop real estate and combination restaurant sites with Wendy’s and Tim Hortons restaurants under the same roof in North America. In 1995, Wendy’s purchased Mr. Joyce’s interest in the Tim Hortons system and incorporated the company known as Tim Hortons Inc. , a Delaware corporation (â€Å"THI USA†), as a wholly owned subsidiary. In 2006, Tim Hortons became a standalone public company pursuant to an initial public offering and a subsequent spin-off of its common stock to Wendy’s stockholders through a stock dividend on September 29, 2006. Tim Hortons restaurants operate in a variety of formats. Tim Hortons’ standard restaurant locations typically range from 1,000 to 3,080 square feet. The non-standard restaurant locations include small, full-service restaurants; self-serve kiosks, typically with a limited product offering, in offices, hospitals, colleges, airports, grocery stores, gas and other convenience locations; drive-thru-only units on smaller pieces of property; and full-serve locations in sports arenas and stadiums that operate only during on-site events. Also Tim Hortons developed co-branded locations in its restaurant system. Tim Hortons is party to an agreement with Kahala Franchise Corp. the franchisor of the Cold Stone Creamery brand, pursuant to which Tim Hortons has exclusive development rights in Canada. Tim Hortons is also party to an agreement with Kahala Franchising, L. L. C. in the U. S. , pursuant to which Tim Hortons has the right to use the Cold Stone Creamery trademarks in specified locations in the U. S. The development process for each standard restaurant location typically takes 12 to 18 months. Development of non-standard restaurants an d self-serve kiosks usually requires much less time. Tim Hortons typically oversee and direct all aspects of restaurant development for system restaurants, from an initial review of a location’s demographics, site access, visibility, traffic counts, mix of residential/retail/commercial surroundings, competitive activity, and proposed rental/ownership structure, to considerations of the performance of nearby Tim Hortons locations, projections of the selected location’s ability to meet financial return targets, restaurant owner identification, and physical land development and restaurant design and construction costs. As at December 30, 2012, the number of Tim Hortons restaurants across Canada, both standard and non-standard locations, which for this purpose includes self-serve kiosks, totalled 3,436. Standard restaurants constitute approximately 71. 4% of this total. In the U. S. , Tim Hortons has a regional presence with 804 restaurants, including self-serve kiosks, in 13 states, concentrated in the Northeast in New York and Maine, and in the Midwest in Michigan, Ohio and Pennsylvania with standard full-serve restaurants representing approximately 59. % of all U. S. restaurants. Notably, Tim Hortons owns, rather than leases, the land underlying a higher percentage of standard system restaurants in the U. S. than in Canada. Restaurant owners operated substantially all of Tim Hortons restaurants both in the CANADA and U. S Recently Tim Hortons has granted a master license to Apparel in the GCC States of the United Arab Emirates, Qatar, Bahrain, Kuwait and Oman, which is primarily a royalty-based m odel, together with ongoing supply chain margin and an upfront license fee. Apparel is responsible for capital spending, real estate development, operations, distribution and marketing. At the end of 2012, there were also 190 and 55 Tim Hortons kiosks in the Republic of Ireland and United Kingdom, respectively, which generally offer self-serve premium coffee, tea, specialty hot beverages and a selection of donuts and muffins at gas and other convenience locations. DISTRIBUTION SYSTEM Tim Hortons distribute items to its restaurants through 5 distribution centres located in Langley, British Columbia; Calgary, Alberta; Kingston, Ontario; Guelph, Ontario; and Debert, Nova Scotia. The Guelph and the Kingston facilities distribute frozen, refrigerated and shelf-stable products and dried goods to restaurants in our Ontario and Quebec markets. Under the franchise arrangements, each Canadian restaurant owner is required to purchase substantially all food and other products, such as coffee, sugar, and restaurant supplies, from Tim Hortons or it designated suppliers and distributors. Canadian and U. S. restaurant owners and international licensee are also required to purchase par-baked Maidstone Bakeries products from either Tim Hortons or an outside distributor, depending upon the restaurant location. Tim Hortons own or lease a significant number of trucks and trailers that regularly deliver to most of its Canadian restaurants. Tim Hortons uses third-party distributors to deliver all products to U. S. restaurants and to deliver to certain limited geographic areas of Canada. The international licensee, Apparel, is responsible for local delivery of all products in its market in the GCC through the use of third-party distributors. BUSINESS MODEL Tim Hortoms primary business model is to identify potential restaurant locations, develop suitable sites, and make these new restaurants available to approved restaurant owners. As at December 30, 2012, restaurant owners operated 99. 5% of Tim Hortons’ system wide restaurants. Tim Hortons directly own and operate (without restaurant owners) only a small number of company restaurants in Canada and the U. S. Tim Horton also have warehouse and distribution operations that supply paper and dry goods to a substantial majority of its Canadian restaurants, and supply frozen baked goods and some refrigerated products to most of its Ontario restaurants and Quebec restaurants. In the U. S. , Tim Hortons supply similar products to system restaurants through third-party distributors. Tim Hortons’ operations also include coffee roasting plants in Rochester, New York, and Hamilton, Ontario, and a fondant and fills manufacturing facility in Oakville, Ontario. These vertically integrated manufacturing, warehouse, and distribution capabilities benefit Tim Hortons’ restaurant owners and are important elements of Tim Hortons business model which allow it to: improve product quality and consistency; protect proprietary interests; facilitate the expansion of our product offerings; control availability and timely delivery of products; provide economies of scale and labour efficiencies; and generate additional sources of income and financial returns. Tim Hortons have a unique, layered business model that adds to the scale and success of its system. First, franchising takes account of more than 99% of Tim Hortons’ restaurant system. Tim Hortons have a long-standing history of building positive relationships and collaborating with its restaurant owners to grow collective business. Restaurant owners typically operate an average of 3 to 4 restaurants and have a significant stake in the success of the restaurants they operate. Second, Tim Hortons maintains a controlling interest in a significant majority of the real estate in the full-serve restaurant system in North America to maintain brand integrity and control development. Third, Tim Hortons operates with a â€Å"we fit anywhere† concept that allows it to adapt brand presence to take advantage of both standard and non-standard development opportunities. Fourth, Tim Hortons leverages significant levels of vertical integration that exist in the system. MANUFATURING Tim Hortons has 2 wholly owned coffee roasting facilities in Rochester, New York and Hamilton, Ontario, to blend all of the coffee for restaurants. Tim Hortons also own a facility that produces fondants, fills, and ready-to-use glaze, which are used in connection with a number of the products produced in its Always Fresh baking system. Until October 2010, Tim Hortons owned a 50% joint-venture interest in Maidstone Bakeries. Maidstone Bakeries continues to manufacture and supply all par-baked donuts, Timbits and selected breads, following traditional Tim Hortons recipes, as well as European pastries, including Danishes, croissants, and puff pastry. Those products are partially baked and then flash frozen and delivered to system restaurants, most of which have an Always Fresh oven with the Company’s proprietary technology. The restaurant completes the baking process with this oven and adds final finishing such as glazing and fondant, allowing the product to be served warm to the guest within a few minutes of baking. The Company sold its 50% joint-venture interest in Maidstone Bakeries to its former joint-venture partner, Aryzta, for gross cash proceeds of $475 million in October 2010. For additional information regarding Maidstone Bakeries, see â€Å"Source and Availability of Raw Materials† below. TIM HORTONS IN U. S We continued to focus on accelerating the time it takes to create critical mass for convenience and advertising scale in our most developed U. S. markets, primarily through deployment of the substantial majority of our U. S. restaurant development capital into core growth markets to increase awareness of the brand. We also continued to seek other marketing means, such as community involvement, sponsorships, event site product agreements and other forms of communication, to supplement traditional advertising to reinforce our brand position with guests and to broaden our brand awareness as a Cafe and Bake Shop destination; and sought to complement our U. S. standard format restaurant development activity with non-standard formats and locations through strategic partnerships and relationships. In 1995, Tim Hortons merged with Wendys International, Inc. giving new focus and impetus to the expansion of the Tim Hortons concept in the United States. Tim Hortons locations can presently be found in Michigan, Maine, Connecticut, Ohio, West Virginia, Kentucky, Pennsylvania, Rhode Island, Massachusetts and New York, with responsible expansion continuing in these core markets. The Canadian operation is 95% franchise owned and operated, and plans in the U. S. call for the same key strategy to be implemented as expansion progresses. Currently, there are more than 3,000 restaurants across Canada, and over 600 locations in the United States. In March 2006, Tim Hortons completed an initial public offering of the company and was fully spun off as a separate company as of September 29, 2006. Tim Hortons trades on the NYSE and TSX (THI). As one of the largest publicly traded quick service restaurant chain in North America based on market capitalization, and the largest in Canada, Tim Hortons has 4,264 system wide restaurants, including 3,436 in Canada, 804 in the United States and 24 in the Gulf Cooperation Council as of December 30th, 2012. Since the early 1990s, Tim Hortons and Wendy’s formed a partnership, owned on a 50/50 basis, and jointly developed the real estate underlying â€Å"combination restaurants† in Canada that offer Tim Hortons and Wendy’s products at the same location, typically with separate restaurant owners operating the Tim Hortons and the Wendy’s portions of the restaurant. The combination restaurants have separate drive-thrus, if the site allows for drive-thrus, but share a common

Cirque Du Soleil Essay Example for Free

Cirque Du Soleil Essay Cirque du Soleil began in Quebec with two street performers (Guy Lalibert and Daniel Gauthier) back in 1982 and called their small group of young street performers ‘The High Heels club’ and decided to put on a small festival for the audience. By 1984 Cirque du Soleil was born, the name meaning ‘Circus of the sun’ in French. The main philosophy or aim of Cirque du Soleil is creativity and innovation of the circus to redefine the entertainment landscape, and thrill audiences around the world. Since its inception, Cirque du Soleil has created a lot of shows with incredibly different themes and issues. The most popular of these shows are: Saltimbanco- explores the urban experience in all its myriad forms, Alegria-explores power and the handing down of power over time, the evolution from ancient monarchies to modern democracies, old age, youth. Quidam-it could be anyone, anybody. Someone coming, going, living in our anonymous society. A member of the crowd, one of the silent majority. Dralion- Dralion derives much of its inspiration from Eastern philosophy with its perpetual quest for harmony between humankind and nature. Varekai- production pays tribute to the nomadic soul, to the spirit and art of the circus tradition, and to the infinite passion of those whose quest takes them along the path that leads to Varekai. Cirque du Soleil captures many dramatic forms including acts from contortionists, jugglers, feats of strength, clowning, dance, mime, light climates, puppeteers, stage maneuvers, comedy, interaction with public, acrobats and trapeze artists. An example of your typical act, is a man in a mouse wheel, being spun around in 360Â ° circles, doing tricks that amaze the audience because of the manipulation of gravity. Also, Cirque du Soleil does not make use of any such animals. Traditionally, Cirque du Soleil shows do not use pre-recorded music, with exceptions; all music is played live and in many circumstances sung live by singers with magnificent voices. The costumes used in the show are always very elaborate, or if flexibility is needed the costumes can be plain but are usually colourful and creative, matching the theme of the show. The sets for the shows are typically amazing again always matching the culture being performed on stage. Cirque Du Soleil has a vast range of characters in the huge number of performances and the company itself has over 4000 employees and 1000 artists. Characters in the performance are always bright, colourful and extremely skillful and always are doing amazing tricks that depict the theme of the show or that can lighten and entertain the audience. As the performance goes on most of the time you enter the life of some of the characters as they tell their life story (normally the host) and interact more and more with the audience.

The Advantages And Disadvantages Of Colonialism

The Advantages And Disadvantages Of Colonialism The colonialism has a lot of advantages and disadvantages which will be explore in this essay but before going to that let know what colonialism is a lot about. Colonialism is the total control or governing influence of nation over a dependent country or people or condition of being colonial. The colonized countries were mostly Africans because of the way they lived and behave so the colonizers were using the excuse of them not civilized and religious. But the colonial masters aim was to exploit the colony economy and move them to their country making the colony depend on them. The disadvantages of colonialism is far more than its advantages, the main advantage is the civilization while the disadvantage is the economic dependent. But let talk of the advantages before its disadvantages. Advantages of Colonialism However, the advantages are the stop of killing twins especially among the Igbos and the reason behind the killing of them was the beliefs which says is against nature and inherently evil just because it rare occurrence. So when the colonial masters came it was seen as an act of early age practice, which needed to be stopped because, is in human. Also the equality among the men and women in a public opinion with education for everyone in Christian theology and academic field. In particular the education because is the best aspect of the colonialism, most of early age people were not educated, dress themselves with leaves hunt food in forest and so on. Why education is important part of colonialism is that it brings about civilization because when the people are educated they will definitely be civilize and the country too because they both work together. Also the newborn and toddler deaths that were dealt with because the death of young children and infants were seriously occurring a nd the Africans do not know the cause of them more or less prevent or cure it because of lack of education, so the coming of the colonizers help the Africans to solve the problem. Also, the way women were treated by sexism and violence was stopped, they were treated like property to the men, they were not allow to speak in public nor listen to their opinion and they were harass by the men. So when the colonial maters came they saw that as an act of immorality because both men and women are humans with equal rights and they stopped it too. Another advantage is the development from the colonizers such as infrastructure that is electricity, telecoms roads and water which impacted a lot to African people because all this were not in advanced in the country. And in the field of medicine is was very important because the infants death was cure through it, the African people now buy preserved food which are manufactured with development in agriculture, mining and manufacturing which stopped the hunting of food because they hunt before they can eat. All this happen with the help of modern farming methods and food security that were invented to the country. There was a lso development in politics bringing democracy system of government which is to make everyone vote and be voted for. There were trade opportunities making the African people to have access to external trade around the world which expose them to other ways of trading. There are advantages but some of the important ones were explored in the essay. Disadvantages of Colonialism Moreover, the disadvantage are far more than the advantages been through with the advantages let move on to the disadvantages. There was loss of culture because the colonial masters were trying to bring their ways of life, behave and culture making the African cultures to go down living their own ways. The African way was the loyalty to the royal rulers with members of parliament and followers among the ethnics groups but the coming of the colonial masters made them to have complete loss of culture. With that happening it brought about lack of respect for Africans traditions with submission to the colonizers ways and behavior. Another disadvantage is the lost of land which were forcefully collected from Africans with guns on their heads making them to have nothing on their own and some of them are with families to feed but for their lives they have to let go of the land which were given to the Europeans un Africa. On snatching those lands making them homeless and struggling to surviv e the colonial masters imposed tax on them which forced the Africa to work for some of the colonizers settling in Africa to enable them pay the taxes which made them loss ownership in general of their land. With that there were more and more settlers in Africa which was making them to be exposing to new diseases such as ablepsy, malarial fever, yellow fever, malnutrition and so on. Those diseases were also killing the Africans because they are yet to develop medically to know what those diseases are and to treat them. There was economic dependent; before the colonial masters came they were managing their economy and the recourses the way they came without having problem but when the colonizers came they started exploiting the recourses to their country. Furthermore, the Africas economy was very good but they do not exploit what they cannot use, knowing this by the colonial masters they decided to come and exploit using the excuse of not civilize and religious on doing that it makes the Africans to depend on them when the land is owned by them. There was also the dominant class that is the ones to rule them with the aid of the rulers and also spy on Africans to know whether they are doing what they are asked which made them called the natives savages that is uncivilized people. At that time the living conditions in Africa changed a lot with the forced culture imposed on them bringing their own ways making the people to be westernized that are dressing, clothing, behavior and act of doing everything in their ways. There was also slave trading; Africans were carried from their homes to the colonial masters country to go and work for them and also fight in wars for them which when they will come back they will only given recommendation but if it is their countrymen they were treating them like they fought actively than the Africans while they know it was not so. Also lack of moral compass that is not been concern with rules of right conduct within the determined directions by colonial masters and paying allegiance to them. Finally, some of this disadvantages are still in existing in Africa especially Nigeria because we are still paying the loyalty to the colonial masters. There are more disadvantages but the little of them was explored in the essay and as for the advantages it really has impacted a lot on African people. In medical field; the African people are trying their possible best to be like the colonizers, most of the diseases in Africa are from them such as measles, malaria and recently Hiv/Aids but both the colonizers and their colony are working on the treatment. In Nigeria colonialism ended when it got is independent which a lot has improved such areas are industries, mining, agriculture and so on but the first two are the one focused on making agriculture to go down which is not suppose to be so because Nigeria is a fertile land. So if agriculture is given attention too will also improve the economy of the country because there are both political and economical instability in the country s o the only way is to improve in more aspect of the economy and they should also be a nationalist in whole Africa to make it a better continent. The advantages and disadvantages of colonialism is a very good aspect of history because it made someone to know what happened in the past and what is still happening in the country.

William Faulkners A Rose for Emily Essay -- A Rose for Emily, William

William Faulkner's A Rose for Emily In the story â€Å"A Rose for Emily†, William Faulkner, the author talks about a life of a woman and the town she lived in. The story begins just when miss Emily died. The author doesn’t tell us much about that time except that many people were interested to see what was in her house. As the story progresses, the author decides to jump all the way to the beginning when miss Emily was still a young woman and her father was still alive. During that time, the town felt bad for poor miss Emily and thought that she was going to die with out a husband by her side, since her father didn’t like any men that liked his daughter. Later on, the author gets to the time when her father just died. Miss Emily felt so alone that she decided to keep her dead father’s body in the house, and not let anyone take him away from her. After the neighbors kept coming to the city council and complaining about the fowl smell that was coming from miss Emily’s house, the judge sent a few men to put lime around the house to kill the smell. As the reader later finds out, the smell was coming from miss Emily’s father’s decaying body. Finely the authorities took the dead body out of the house and buried it. As the story goes on, the reader is told that the town was being renovated, streets being paved and such. With the renovators, came a young man, by the description, he was a handsome young man. The town kept talking as they always did, gossiping about miss...

School Uniforms Solving the Problem Essay -- essays papers

School Uniforms Solving the Problem Over the past couple of years, school uniform policies have been enforced as the most efficient method for â€Å"solving† problems such as crime and attendance ratings in our public schools. Many schools state that it is quite true that uniforms are lowering such mentioned rates of crime tremendously, but can this really be proven? Currently, there have only been informal studies that try to actually see if uniforms are helping, no long term studies. Technically speaking then, mandating uniforms in our school systems is not the key to fixing problems with the youth. For example, California’s Long Beach school district says that ever since the year of 1994, when uniforms in their schools were put into place, the crime there has dropped by seventy-six percent and attendance ratings have never been higher. This of course sounds lovely and all but the fact is that it just has not been proven that the uniforms themselves have helped make these problems better. Even if it had been proven that the uniforms are helping over anything else, they still have been creating other problems. â€Å"Clothes are a source of expression for children, and as kids gets older, they become increasingly resentful of uniforms,† said Dr. Alan Hilfer who later added that uniform policies take way our children’s individualities. Other education experts see the uniforms as a violation to the rights of the students to their freedom of expression a...

Philosophy - Impact of the Leviathan in Hobbess Leviathan and the Book

The Impact of the Leviathan in Hobbes's Leviathan and the Book of Job Throughout the early chapters of his Leviathan, Thomas Hobbes employs metaphorical devices from such diverse fields as mathematics, mechanics, and even the biology of the human body to describe his political community. In reference to the inception of the body politic, Hobbes compares its artificial origins to the Leviathan, a monster in the Book of Job: "For by art is created that great LEVIATHAN called a COMMONWEALTH, or STATE" (Hobbes 3).1 A biblical monster may initially seem to be an implausible metaphor for Hobbes to choose as a means of advocating his political regime. In addition to Hobbes’s animosity towards conventional Christian practices, the metaphor of the monstrous Leviathan holds negative connotations about the brutal force of the political community for, according to the Book of Job, "None is so fierce as to stir him [the Leviathan] up" (Job 41:10).2 However, the depiction of the body politic that emerges from a comparison with the Leviathan in the Book of Job reveals inherent benefits of Hobbes’s political system that might not be readily perceivable. By using the Leviathan as a metaphor for the commonwealth, Hobbes emphasizes one of the most beneficial, though potentially oppressive, attributes of the body politic: its immense strength. According to Hobbes, the political community will function as a unified whole when the power is concentrated in the sovereign, making him the seat of incredible strength: "The greatest of human powers is that which is compounded of the powers of most men, united by consent in one person, natural or civil, that has the use of all their powers depending on his will, such as is the power of the com... ...ciety of the utter necessity of voluntarily handing over their individual rights is somewhat unlikely. Even if one could convince all citizens that this relinquishment of power were desirable, after the initial creation of the body politic, the cohesive unity indicated by the metaphor of the Leviathan seems highly improbable because one sovereign will be hard-pressed to accurately embody the will and to serve the interest of such a vast multitude. Thus, the very mortality and physicality that would allow for the strength of the Leviathan to be implemented to serve the interests of the people make it equally likely that the strength could be misused in tyrannical oppression. Works Cited 1. Thomas Hobbes, Leviathan, ed. Edwin Curley (Indianapolis: Hackett Publishing Company, 1994). 2. The Holy Bible, King James Version (New York: American Bible Society).

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