Following the decision diagrams and using the related‐party/de facto principal and agent rules included in FIN 46(R)
The lessee holds a variable interest in the lessor in the form of the guarantee of the lessor's mortgage debt.
The lessor entity is not “scoped out” of FIN 46(R).
The lessor entity is a business. It has inputs (owned fixed assets), processes for managing its investment, and outputs relative to access to the lessee.
The following “further evaluation factors” apply:
The lessee/variable interest holder and its related parties participated significantly in the design of the lessor.
The design of the lessor LLC results in all of its activities involving and being conducted on behalf of the lessee/variable interest holder.
The lessee/variable interest holder and its related parties provided 100% of the subordinated financial support for the lessor entity.
The lessor entity's activities relate to a single‐lessee lease.
The lessee/evaluator and its related‐party owner were involved in the design of the lessor entity.
The lessee's variable interest is assumed to be significant for the purpose of this analysis. Fin 46(R) does not provide guidance on making this determination.
The lessee's variable interest is in the leased asset.
The fair value of the leased asset represents 100% of the total fair value of the lessor's assets and thus is deemed to be an interest in the lessor as a whole versus an interest in just the specified assets of the lessor.
The at‐risk ...