Variable interest entities:
A) may be accounted for either using consolidation or fair value.
B) often do not specify who has the controlling interest.
C) can be used to shield liabilities from disclosure.
D) All of the above.

Question

Quizplus · Accepted Answer

Variable interest entities (VIEs) are complex financial structures that can be used for various purposes, including off-balance sheet financing. They often do not specify who has the controlling interest, which can make it difficult to determine who should consolidate the VIE. Additionally, they can be used to shield liabilities from disclosure on the balance sheet of the primary beneficiary. The accounting for VIEs can involve consolidation if the entity determining it has the controlling interest, rather than fair value measurement, to reflect its financial position and results accurately.

Variable Interest Entities