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The Deferral

The VIE model was amended by ASU 2010-10 for certain investment entities that meet the following conditions:

  1. The entity either:
    • Has all attributes set forth in AC 946-10-15-2(a) through (e);
    • Does not have all of the attributes set forth in ASC 946-10-15-2(a) through (d), but applies guidance consistent with the measurement principles in ASC 946 pursuant to an industry practice.
  2. The company does not have any obligation to fund losses of the entity that could potentially be significant to the entity.
  3. The entity is not a securitization entity, an asset-backed financing entity, or an entity formerly considered a qualifying special-purpose entity.

The deferral is also available to certain money market mutual funds that are required to comply with or operate within the requirements of Rule 2a-7 of the Investment Company Act of 1940, even if the fund manager has the obligation to fund losses that could potentially be significant.

The above conditions must be met on the date the entity adopts the VIE model as amended by ASU 2009-17. If the deferral is effective (it is not optional), then the unamended VIE model under FIN 46(R) should be applied (i.e., the ASC 810-10 model before amendments by ASU 2009-17 and ASU 2010-10). If facts and circumstances change after initial qualification for the deferral such that the deferral is no longer available to the company, then the as-amended VIE model under ASC 810-10 should be applied.

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