Companies in which equity investors cannot provide financing for the entity's business risks and activities without additional financial support are considered variable interest entitites according to the GAAP.

Question

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According to GAAP (Generally Accepted Accounting Principles), a variable interest entity (VIE) is an entity in which equity investors have limited or no ability to provide financing or to make decisions about the entity's business activities. Therefore, additional financial support is often required from other parties, and the VIE must be consolidated on the financial statements of the controlling entity.

Companies in Which Equity Investors Cannot Provide Financing for the Entity's