In January 2003, the FASB released Interpretation 46, "Consolidation of Variable Interest Entities," which:
A)re-emphasized the need for 50% stock ownership to exert effective control.
B)expanded U.S.GAAP to consider effective control rather than legal control for consolidated financial statements.
C)took a "form-over-substance" approach to define control in determining requirements for consolidated financial statements.
D)defined effective control as ownership of 30% or more of another entity's voting shares.

Question

Quizplus · Accepted Answer

Interpretation 46 expanded U.S. GAAP to consider effective control, rather than legal control, for consolidated financial statements. It aimed to address the use of variable interest entities (VIEs) in off-balance-sheet financing arrangements, where a company may have effective control over an entity without owning a majority of its voting shares. The purpose was to improve transparency and prevent potential abuse of financial reporting.

In January 2003, the FASB Released Interpretation 46, "Consolidation of Variable