FSA: sample exam; peter Langer's case: ROE like, question, solution, between, correct

CFA4Techie

there is a question ask" If langer is correct in his belief about Sequoia being a VIE, Masson's ROE in 2009 would be closest to:"

if Masson need to fully consolidate the b/s between Sequoia and Masson, should MI be added into equity to get new ROE?

the solution looks like does not donsider MI. any thought? Thanks.

profil

It's a vie which assumes 100% of control if im not mistaken so you consolidate as if it was a subsidiary

- Guille

Otabek

I aggree with the full consolidation, but I don't think Masson purchased all Sequio equity, so there is minority interest there, when calculate ROE, need to add MI into equity, but the case does not give any informatio that we could derive MI... any thought? Thanks.

Guille_GE Wrote:
-------------------------------------------------------
> It's a vie which assumes 100% of control if im not
> mistaken so you consolidate as if it was a
> subsidiary

senlinlang

How do you come up with the minority interest amount though?

- Guille

ningning1984

pretty sure you don't need to know anything about minority interest for that one....you're just adjusting NI and equity right?

ninja1024

if full control, equity need to include MI,
for both GAAP and IFRS, can somebody confirm? Thanks.
AndrewUNH Wrote:
-------------------------------------------------------
> pretty sure you don't need to know anything about
> minority interest for that one....you're just
> adjusting NI and equity right?

ap0258

I think the point is that if it is a vie assume 100% as you think of it as if it is the same company, hence 100% consol, so no minority interest, equity is impacted only by the net income contribution from the vie

- Guille

sameeragarwal

Guille_GE is right...not sure why you are looking for MI. If Mason bought a percentage of Sequido (say 80%) then you would consolidated and use MI. BUT in this case Sequido is a VIE, just an extension of Mason, Mason is considered to own 100% of Sequido as they guarantee the debt and benefit from profits (suffer losses). There is no minority interest.

scarecrow

thanks guys