test practice 4 - A variable interest entity can take all...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
A variable interest entity can take all of the following forms except a Trust. Partnership. Joint venture. Corporation. Estate. All of the following are examples of variable interests except Guarantees of debt. Stock options. Lease residual value guarantees. Participation rights. Asset purchase options. Which of the following is not a potential loss or return of a variable interest entity? Entitles holder to residual profits. Entitles holder to benefit from increases in asset fair value. Entitles holder to receive shares of common stock. If the variable interest entity cannot repay liabilities, honoring a debt guarantee will produce a loss. If leased asset declines below the residual value, honoring the guarantee will produce a loss. Which of the following characteristics is not indicative of an enterprise qualifying as a primary beneficiary with a controlling financial interest in a variable interest entity? The power to direct the most significant economic performance activities. The power through voting or similar rights to direct activities which significantly impact economic performance. The obligation to absorb potentially significant losses of the entity. No ability to make decisions about the entity's activities. The right to receive potentially significant benefits of the entity. Which of the following statements is false concerning variable interest entities (VIEs)? Sometimes VIEs do not have independent management. Most VIEs are established for valid business purposes. VIEs may be formed as a source of low-cost financing. VIEs have little need for voting stock. A VIE cannot take the legal form of a partnership or corporation.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 5

test practice 4 - A variable interest entity can take all...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online