Q1. Firm A recently leased equipment used in its manufacturing plant. If the leased asset is worth less than $100,000 at the end of
the lease, Firm A will pay the lessor the difference.
Firm B provided debt financing to an unrelated entity. The debt has a provision whereby Firm B cannot be repaid until all other senior debt is satisfied.
According to FASB Interpretation No. 46(R), do Firm A and Firm B have a variable interest?
A) Only one has a variable interest.
B) Neither have a variable interest.
C) Both have a variable interest.
Q2. Which of the following statements about variable interest entities (VIE) are correct or incorrect?
Statement #1 One potential benefit of a VIE is a lower cost of capital since the assets and liabilities of the VIE are isolated in the event the sponsor experiences financial difficulties.
Statement #2 The organizational form of a VIE must be either a partnership or a joint venture and it is necessary for the VIE to have separate management and employees.
A) Only one is correct.
B) Both are correct.
C) Both are incorrect.
Q3. Which of the following statements about special purpose entities (SPE) are correct or incorrect?
Statement #1: The sponsor usually maintains the decision-making power and voting control over the SPE.
Statement #2: The equity owners of an SPE usually receive a rate of return that is tied to the performance of the SPE.
A) Both are correct.
B) Both are incorrect.
C) Only one is correct.
答案和详解如下：
Q1. Firm A recently leased equipment used in its manufacturing plant. If the leased asset is worth less than $100,000 at the end of
the lease, Firm A will pay the lessor the difference.
Firm B provided debt financing to an unrelated entity. The debt has a provision whereby Firm B cannot be repaid until all other senior debt is satisfied.
According to FASB Interpretation No. 46(R), do Firm A and Firm B have a variable interest?
A) Only one has a variable interest.
B) Neither have a variable interest.
C) Both have a variable interest.
Correct answer is C)
A lease residual guarantee and subordinated debt are both examples of variable interests. Firm A will experience a loss if the leased asset is worth less than $100,000 at the end of the lease. Firm B will experience a loss if the senior debt is not paid in full.
Q2. Which of the following statements about variable interest entities (VIE) are correct or incorrect?
Statement #1 One potential benefit of a VIE is a lower cost of capital since the assets and liabilities of the VIE are isolated in the event the sponsor experiences financial difficulties.
Statement #2 The organizational form of a VIE must be either a partnership or a joint venture and it is necessary for the VIE to have separate management and employees.
A) Only one is correct.
B) Both are correct.
C) Both are incorrect.
Correct answer is A)
Statement #1 is a correct statement. A lower cost of capital is a potential benefit of forming a VIE. Statement #2 is an incorrect statement. The organizational form can be a corporation, partnership, joint venture or trust. It is not necessary for the VIE to have separate management and employees.
Q3. Which of the following statements about special purpose entities (SPE) are correct or incorrect?
Statement #1: The sponsor usually maintains the decision-making power and voting control over the SPE.
Statement #2: The equity owners of an SPE usually receive a rate of return that is tied to the performance of the SPE.
A) Both are correct.
B) Both are incorrect.
C) Only one is correct.
Correct answer is B)
Both statements are incorrect. The activities of an SPE are specifically detailed in governing documents. The sponsor does not usually have voting control over the SPE. The structure of the SPE transfers the risks and rewards from the equity owners to the variable interest owners. In return, the equity owners usually receive a fixed rate of return.thanks
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