Which of the Following Statements Regarding Consolidation of a VIE

question 118

Multiple Choice

Which of the following statements regarding consolidation of a VIE with its primary beneficiary is true?

• A) The consolidation of a VIE with its primary beneficiary requires the business enterprise to follow a separate process than the one required for consolidations based on voting interests.
• B) All intra-entity transactions between the primary beneficiary and the VIE are included in the consolidation.
• C) Only intra-entity transactions between the primary beneficiary and the VIE resulting from intra-entity transfers are eliminated in the consolidation.
• D) VIEs with controlling interests must include one hundred percent of the primary beneficiary's net income in a consolidation.
• E) The allocation of the VIE's net income is based on an analysis of the underlying contractual arrangements between the primary beneficiary and other holders of variable interests.

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Definitions:

Ratified

An agreement or decision that has been formally approved and confirmed by the required parties.

Actual Authority

The express and implied powers given by a principal to an agent to enter into contracts or take action on the principal's behalf.

Sales Force

The division of a business responsible for selling its products or services, made up of all its salesperson.

Office Manager

An individual responsible for ensuring the smooth operation of an office, including managing administrative staff and processes.