What defines a variable interest entity (VIE)?

A variable interest entity (VIE) is characterized by the absence of equity investors with voting rights, which is why the choice highlighting this characteristic is correct. VIEs often arise in situations where a company invests in an entity but does not have the traditional rights associated with ownership, such as the ability to control or influence the entity's decisions through voting.

In financial reporting, recognizing and consolidating VIEs is essential because they may expose the investors to significant risk despite having no formal equity control. Consequently, criteria defining a VIE typically focus on how the entity is financed and who has decision-making authority rather than its overall structure or purpose.

The other choices do not accurately capture the essence of a VIE. For instance, a corporation with significant equity investors or one structured for governmental purposes might not have the specific characteristics that render it a VIE, while sufficient financial resources are not a defining factor. Therefore, focusing on the lack of equity investors with voting rights provides a clear understanding of what constitutes a VIE.