The Primary Beneficiary of the Variable Interest Entity Controls the Resources

question 33

Multiple Choice

The primary beneficiary of the variable interest entity controls the resources of and will obtain the future benefits from the variable interest entity:

• A)Those resources meet the definition of an asset and should be included on the consolidated balance sheet of the primary beneficiary.
• B)A review of the legal documentation which established the variable interest entity will assist us in determining who the beneficial owners of the variable interest entity are.
• C)Because the primary beneficiary normally has no voting control of the entity the question of future benefits is irrelevant.
• D)None of the above applies.

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Definitions:

Divisional Structure

A type of organizational structure that groups together those employees who are responsible for a specific product type or market service according to workflow.

Expertise Focused

Concentration or specialization in a particular area of knowledge or skill.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.

Costs

The monetary value associated with the consumption of resources, such as production, operations, or acquisition expenses.