Avalanche Operates as a Strategic Business Unit (SBU) Under Snowfall

question 51

Multiple Choice

Avalanche operates as a strategic business unit (SBU) under Snowfall Inc., a home-furnishings manufacturer. From this information, it may be reasonable to infer that

• A) Avalanche does not have its own profit and loss responsibility.
• B) Avalanche is dependent on the other SBUs in Snowfall Inc.
• C) Avalanche has a matrix organizational structure.
• D) Avalanche is led by its own CEO (or equivalent general manager).

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Definitions:

IFRS

International Financial Reporting Standards, which are a set of accounting standards developed by the IASB that provide a global framework for preparing financial statements.

Sham Exchanges

Transactions that lack substance or economic purpose, often designed to create deceptive appearances or evade taxation.

Commercial Substance

Commercial substance is a concept that a transaction significantly changes the economic position or cash flows of a company, beyond the mere transfer of assets or obligations.

GAAP

Generally Accepted Accounting Principles, a standard framework of guidelines for financial accounting that includes the details, complexities, and legalities of business and corporate accounting.