Which of the following is not an indicator that requires a sponsoring firm to consolidate a variable interest entity (VIE) with its own financial statements?
A) The sponsoring firm has the obligation to absorb potentially significant losses of the VIE.
B) The sponsoring firm receives risks and rewards of the VIE in proportion to equity ownership.
C) The sponsoring firm has the right to receive potentially significant benefits of the VIE.
D) The sponsoring firm has power through voting rights to direct the entity's activities that significantly impact economic performance.
E) The sponsoring firm is a primary beneficiary fo the VIE.

Question

Quizplus · Accepted Answer

The requirement to consolidate a VIE is based on the firm being the primary beneficiary, which involves having the power to direct activities and the obligation to absorb losses or receive benefits, not merely proportional equity ownership.

Which of the Following Is Not an Indicator That Requires