Select three of the following questions for your initial response. Important: At least one (and preferably two) of the questions you decide to answer should be a question not answered by a classmate as of when you make your initial responses. Copy and paste the questions you decide to answer in bold type. It is a good idea to select questions to which you do not know the answer or would like to understand better. Also, be bold and answer a question you have not seen a classmate answered yet.
- How does a variable interest entity differ from a traditional corporate business entity? Be specific.
- What major criteria must be met before a company is consolidated? Again,be specific, referring to the Codification where necessary.
- What types of entities are referred to as special-purpose entities, and how have they been generally used?
- What is meant by indirect control? Give an illustration or an example.
- Explain the differences between consolidated and combined financial statements. Be specific.
- What is meant by a noncontrolling interest in a subsidiary?
- What must be done if the fiscal periods of the parent and the subsidiary are not the same?
- When is consolidation considered inappropriate even though the parent company holds a majority of the voting common shares of another company?
- Are consolidated financial statements likely to be more useful to the creditors of the parent company or the creditors of the subsidiaries? Why or why not?
- What characteristics are normally examined in determining whether a company is a primary beneficiary of a variable interest entity?
