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:

Company Profits

The financial gain that a company obtains after deducting all its expenses from its total revenues.

Restructuring

The process of altering the organizational, operational, or financial setup of a company to make it more profitable, efficient, or better organized for its current needs.

Systematic Change

A comprehensive and coordinated effort to modify the structures, processes, or policies of an organization or society to achieve significant improvements.

Work Redesign

The process of reevaluating and altering jobs or workflows to improve employee productivity and job satisfaction.