Under the U

question 13

Multiple Choice

Under the U.S.accounting rules, the following conditions were required to consider special purpose entities (SPEs) to be independent parties:

• A)Independent investment of less than 3% of the SPE's equity and independent control of the SPE
• B)Independent investment of at least 3% of the SPE's equity and independent control of the SPE
• C)Substantive investment of at least 3% of the SPE's equity and independent control of the SPE
• D)Independent investment of at least 3% of the SPE's assets at risk and independent control of the SPE
• E)Substantive investment of less than 3% of the SPE's assets at risk and independent control of the SPE

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Definitions:

Total Processing Time

The sum of the time periods required to complete all stages of a manufacturing or production process.

Work Centre

A specific location where work tasks within a production process are carried out, often consisting of people, machines, and materials.

FCFS Dispatching Rule

First-Come, First-Served dispatching rule; a method of process queuing in which tasks are tackled in the order of their arrival.

Services

Intangible products such as maintenance, repair, advice, or entertainment that are consumed at the point of delivery.