Under IFRS,SPEs Are Consolidated When Evidence Indicates That the Reporting

question 79

Multiple Choice

Under IFRS,SPEs are consolidated when evidence indicates that the reporting company "controls" the SPE.Control is presumed if which of the following conditions exist?
I.The reporting entity performs activities on behalf of the SPE.
II.The SPE has decision-making powers over the activities of the reporting entity.
III.The reporting company has the right to obtain the majority of the benefits of the SPE activities.
IV.The reporting company retains the majority of the residual or ownership risks related to the SPE or its assets.

• A)I and II only.
• B)I,II,and III only.
• C)III and IV only.
• D)I,II,III,and IV.

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Definitions:

Net Present Value

The economic distinction based on the present valuation of incoming versus outgoing cash flows during a fixed period.

Profitability Ratio

A class of financial metrics used to evaluate a business's ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time.

Average Accounting Return

A financial ratio that measures the average net income a company expects to earn from an investment compared to its initial cost.