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:

Labeling Theory

A sociological theory that suggests the labels or definitions society applies to individuals can influence their behavior and self-identity.

Deviance

Actions or behaviors that contravene established societal standards and anticipations.

Erikson

Refers to Erik Erikson, a development psychologist known for his theory on psychological development across eight stages in life from infancy to late adulthood.

Harold Garfinkel

An American sociologist known for establishing the field of ethnomethodology, which studies the ways people make sense of their everyday lives.