Which of the Following Is Not a Potential Loss or Return

question 56

Multiple Choice

Which of the following is not a potential loss or return of a variable interest entity?

• A) Entitles holder to residual profits.
• B) Entitles holder to benefit from increases in asset fair value.
• C) Entitles holder to receive shares of common stock.
• D) If the variable interest entity cannot repay liabilities, honoring a debt guarantee will produce a loss.
• E) If leased asset declines below the residual value, honoring the guarantee will produce a loss.

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Definitions:

Unlimited Wants

The economic principle that humans have infinite desires or wants but limited resources to fulfill them.

Scarce

Denotes the fundamental economic problem of having seemingly unlimited human wants in a world of limited resources, which necessitates prioritization of resource allocation.

Choices

Decisions made by individuals or organizations among two or more alternatives.

Rational Government

The concept of a government acting based on reasoned decisions, typically aiming for the most economically efficient outcomes that maximize social welfare.