Which of the Following Is True Regarding SIC 12,"Consolidation--Special Purpose

question 67

Multiple Choice

Which of the following is true regarding SIC 12,"Consolidation--Special Purpose Entities",and FIN 46R,"Consolidation of Variable Interest Entities"?

• A) Both pronouncements show evidence of being a principles-based standard.
• B) Both pronouncements state that the substance of the relationship between an entity and the variable-interest or special-purpose entity is the determining factor in deciding to consolidate a variable-interest or special-purpose entity.
• C) Both pronouncements state that the entity expected to bear the majority of the expected gains or losses of the variable-interest or special-purpose entity should consolidate the variable-interest or special-purpose entity.
• D) Both pronouncements state that technical voting control of an SPE is the determining factor in deciding to consolidate a variable-interest or special-interest entity.

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Definitions:

Market Exit

The process of a company stopping its business operations or leaving a market, often due to unprofitability or strategic realignment.

Concentrated Industry

An industry characterized by a few firms controlling a large market share, leading to reduced competition.

Relatively Small

A comparative term indicating that something is smaller in size, amount, or degree when compared to others in a similar context.

Number of Firms

This refers to the total count of businesses operating within a specific market or industry.