The paper discusses the effects of a recent FASB standard that changed the rules for consolidating 'variable interest entities' (VIEs, similar to what SIC 12 calls a 'special purpose entity', or SPE). FAS 167 requires an investor to consolidate a VIE if it has both (a) the power to direct the activities that most significantly impact the VIE's economics, and (b) the right to receive benefits or the obligation to absorb losses. Many US public companies completed their implementation of the new consolidation standard during the first quarter of 2010. The paper examines some of the challenges and issues that those initial adopters faced, as well as provides an analysis of the impact consolidation may have had on their consolidated financial statements. The issue of consolidation of VIEs is in the scope of the current joint IASB-FASB project on Consolidation. A final standard to replace IAS 27 is planned for fourth quarter 2010. Click to download Back on-balance sheet: Observations from the adoption of FAS 167 (PDF 259k).