Which of the following criteria is applicable with respect to determining when a variable interest entity (VIE) must be consolidated into the sponsoring firm's financial statements?
A) A consolidation must occur if the firm has a controlling financial interest and is the VIE's primary beneficiary.
B) A consolidation must occur if the firm is entitled to receive all of the VIE's residual returns.
C) A consolidation must occur regardless of the risk of loss exposure.
D) A consolidation must occur if the sponsoring firm owns more than 50% of the VIE's equity.
Correct Answer:
Verified
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