Intercompany Transactions F10-35b

What is the 2 step process GAAP established to determine whether the relationship requires an entity to be consolidated with another entity?

The entity being considered for consolidation must be assessed to determine :

1. if it is a variable interest entity, and if so, the primary beneficiary of the VIE
2. if the entity is not a VIE, whether an investor has equity ownership that enables it to exercise control of the investee