Question

when is a firm required to consolidate the financial statements of a VIE with its own...

when is a firm required to consolidate the financial statements of a VIE with its own financial Statements?

a. if it can exercise financial control through its role as a primary beneficiary.

b. if it can exert financial influence through its role as a non beneficiary.

c. if it owns considerable shares of another company .

d. whenever the government notice an attempt to defraud.
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Answer #1

Ans:

VIE means Virtual interest entity. A firm is required to consolidate the financial statements of a VIE with its own financial Statements when it can exercise financial control through its role as a primary beneficiary. A VIE is such an entity in which the person who invests may not have majority of shareholding but have a controlling interest over the Entity. Controlling interest means able to finance in case of requirements, to conduct research on behalf of investor firm. VIE are mostly created to carry on some activities on behalf of the owing firm.

So Correct answer is option A.

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