The entity's equity is not sufficient to support its operations
Residual equity holders do not control the VIE
If an investor is the primary beneficiary of such an entity, the investor must consolidate its financial statements with those of the VIE. The primary beneficiary is the one that can direct the most significant economic activities of the VIE.
Variable interest entities are used as special purpose vehicles to finance certain investments without putting the parent entity at risk of loss.