Multiple Choice
Which of the following is not an indicator that requires a sponsoring firm to consolidate a variable interest entity (VIE) with its own financial statements?
A) The sponsoring firm has the obligation to absorb the expected losses of the VIE if they occur.
B) The sponsoring firm receives risks and rewards of the VIE in proportion to equity ownership.
C) The sponsoring firm has the right to receive the expected residual returns of the VIE if they occur.
D) The sponsoring firm has direct ability to make decisions about the entity's activities.
E) The sponsoring firm has only indirect ability to make decisions about the entity's activities.
Correct Answer:
Verified
Correct Answer:
Verified
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