The Primary Beneficiary of a Variable Interest Entity (VIE) Must

question 31

Multiple Choice

The primary beneficiary of a variable interest entity (VIE) must consolidate the VIE into its financial statements whenever:

• A) substantially all of the entity's activities are conducted on behalf of an investor who has disproportionally few voting rights.
• B) the voting rights are not proportional to the obligations to absorb the expected losses or receive expected residual returns.
• C) the total equity at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support from other parties.
• D) the holders of the equity investment at risk have the right to receive the residual returns of the legal entity

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Definitions:

Close Relatives

Individuals who are directly related to someone through blood ties or through legal means, such as adoption.

Microstructures

The patterns of relatively intimate social relations formed during face-to-face interaction. Families, friendship circles, and work associations are all examples of microstructures.

Protestant Ethic

Protestant Ethic is a concept in sociology that correlates Protestantism with the rise of capitalism, emphasizing hard work, frugality, and diligence as a means to success.

Spirit of Capitalism

The set of ethical and cultural values that encourage hard work, thrift, and efficiency in one's occupational calling.