F4M3

Question 1

How do you know when to consolidate

Answer 1

when there is over 50% ownership

Question 2

Consolidated subsidiaries at what basis

Answer 2

fair value

Question 3

Noncontrolling interest

Answer 3

portion of equity (net assets) of a subsidiary that is not attributable to the parent

Question 4

Variable Interest Entity Characteristics

Answer 4

1. parent company has variable interest
2. Business is a variable interest entity
3. Parent company is the primary beneficiary

Question 5

Parent company has variable interest

Answer 5

• all of the activities are for the benefit of the parent company
• more than half of the total equity is provided by the parent company
• business is a legal entity (rather than a person)

Question 6

Business Entity is a VIE

Answer 6

• inability to make their own decisions
• disproportionately few voting rights
• no right to receive residual returns

Question 7

Primary Beneficiary Conolidates

Answer 7

aborbs expected losses

receives expected returns