In January 2003, the FASB Released Interpretation 46, "Consolidation of Variable

question 31

Multiple Choice

In January 2003, the FASB released Interpretation 46, "Consolidation of Variable Interest Entities," which:

• A)re-emphasized the need for 50% stock ownership to exert effective control.
• B)expanded U.S.GAAP to consider effective control rather than legal control for consolidated financial statements.
• C)took a "form-over-substance" approach to define control in determining requirements for consolidated financial statements.
• D)defined effective control as ownership of 30% or more of another entity's voting shares.

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Definitions:

Actual Outputs

The real, measurable production or work results achieved by a company or an individual, often compared to planned or expected outputs.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels, allowing for more accurate financial planning.

Variable Costs

Expenses that change in proportion to the activity of a business.

Fixed Overheads

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance costs.