An Entity Would Be Considered the Primary Beneficiary of a Variable

question 9

Multiple Choice

An entity would be considered the primary beneficiary of a variable interest entity (VIE) if the entity

• A) provides the majority of financial support when other parties are providing financial support to the VIE as well.
• B) holds the largest voting interest in the VIE.
• C) holds an equity interest equal to 10% of the total assets of the VIE.
• D) holds an equity interest equal to 20% of the total assets of the VIE.

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Definitions:

Fair Value

An estimate of a security's worth on a given market based on what a knowledgeable, willing, and unpressured buyer would likely pay to a knowledgeable, willing, and unpressured seller.

Non-Cancelable

A contract or agreement clause indicating that the arrangement cannot be terminated before its expiration.

Nonrenewable

Resources or energy sources that cannot be replaced or replenished once they are consumed, such as fossil fuels.