To consolidate or not to consolidate - that is the question. If you need to better understand the answer (or just need a quick refresher) then listen to this week’s episode in which Heather Horn and Matt Sabatini go back to the accounting 101 of consolidations. Topics include:
0:41 - Scope/overview of models. Before jumping into the different models, Matt provides a brief history lesson and walks us through the scope of the consolidation guidance.
3:29 - Variable interest entity model. The variable interest entity (or VIE) model is the starting place for any company thinking through consolidations. Matt walks us through the five characteristics of a VIE.
10:44 - Voting interest model. Matt explains how the voting interest entity (or VOE) model differs from the VIE model, and explains when a company should use each model.
14:40 - Impact. After explaining the two models, Matt highlights the roles judgment and consistency play when thinking though consolidation, as well as why it’s important for companies to get it right.
21:51 - Recent guidance (private company alternative). Matt describes the recent guidance that simplifies the model for private companies, easing the economic burden.
Matt Sabatini is a partner in PwC's National Office, where he helps clients and engagement teams navigate the accounting and financial reporting for complex transactions. He specializes in mergers, acquisitions, corporate reorganizations, recapitalizations, joint ventures and other investments. He is a frequent presenter at conferences and on webcasts on these topics.
Heather Horn is PwC’s National office thought leader, responsible for developing our communications strategy and conveying firm positions on accounting and financial reporting matters. She is the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series, as well as periodic webcasts for the power and utilities industry. With over 25 years of experience, Heather’s accounting and auditing expertise includes financial instruments and rate-regulated accounting.
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