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Several scope exceptions are provided that exclude certain entities from applying VIE models in ASC840. Following is an example involving the not-for profit entities scope exceptions to the VIE model.
Fact: Springfield museum, an not for profit entity, has purchased an wquity investment in David Corp, a for profit corporation. David Corp has loaned several workd from its own private art collection to the museum.
Required: consider the not for profit scope exception, determine whether the art museum is required to evaluate its involvement with David Corp under VIE model. Next, consider wherther David Corp is required to evaluate its loan to the art museum under the VIE model. To assist in you application of codification guidance, also consult Deloitte's guide book, Consolidation of variable interest entitties.
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