TY - JOUR T1 - FIN 46R Changes Accounting for Many Structured Finance Deals JF - The Journal of Structured Finance SP - 29 LP - 38 DO - 10.3905/jsf.2004.443353 VL - 10 IS - 3 AU - James R. Mountain Y1 - 2004/10/31 UR - https://pm-research.com/content/10/3/29.abstract N2 - Structured finance transactions typically are executed through single-use legal vehicles generically known as “special purpose entities” or “SPEs.” The headline-grabbing financial collapses of 2001 made SPEs famous, and the accounting results they were typically used to achieve, infamous. FASB, the U.S. accounting standard setters, responded with a new accounting rule called FIN 46R. FIN 46R became effective in 2004 and was designed specifically to make a substantial change in the accounting landscape for structured transactions. FASB defined “variable interests” as contractual, ownership, or other commercial interests in an entity that change with changes in the fair value of the entity's net assets (excluding variable interests). A “variable interest entity” (VIE) is an entity subject to FIN 46R consolidation rules. A company that is judged to have a majority of the risks and rewards of a VIE is called the “primary beneficiary” and needs to consolidate the VIE for financial statement purposes. ER -