When a Primary Beneficiary's Consolidation of a Variable Interest Entity

question 38

Multiple Choice

When a primary beneficiary's consolidation of a variable interest entity (VIE) is appropriate,the amounts of the VIE to be consolidated are:
I.Book values for assets and liabilities transferred by the primary beneficiary.
II.Fair values when the primary beneficiary relationship became established.

• A)I
• B)II
• C)Both I and II
• D)Neither I nor II

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Definitions:

Deposit In Transit

Funds that have been received and recorded by a company but not yet credited by its bank, often seen in bank reconciliation processes.

Bank Statement Adjustment

Adjustments made to a bank statement balance to reflect transactions or corrections not yet recorded by the bank, ensuring accuracy in financial records.

Company Books Adjustment

Changes or corrections made to the accounting records of a business to reflect the true financial position.

Interest Revenue

Interest revenue is the income earned by an entity through lending money or through investment securities that pay interest.