The Primary Beneficiary of a Variable Interest Enterprise

question 10

Multiple Choice

The primary beneficiary of a variable interest enterprise:

• A)Must include the assets,liabilities,and results of the variable interest enterprise in its consolidated financial statements.
• B)Can simply record income on a cash basis when dividends are received or income accrued.
• C)Only recognizes a gain or loss on the sale of its interest in the variable interest enterprise.
• D)Only includes the results of the variable interest enterprise if it has in excess of 50% of the voting share capital of the variable interest enterprise.

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Definitions:

Board Size

Refers to the number of directors serving on a company's board, important for governance and strategic decision-making.

Poison Pill

Shareholder rights provisions that allow existing shareholders in a company to purchase additional shares of stock at a lower than market value if a potential acquirer purchases a controlling stake in the company.

Corporate Restructuring

The process of significantly changing a company's business model, organizational structure, or financial structure, often in response to financial pressures.

Horizon Value

The estimated value of a company or investment at the end of a specific period, taking into account future cash flows or income it will generate.