Select three of the following questions for your initial response. Important: At least one (and preferably two) of the questions you decide to answer should be a question not answered by a classmate as of when you make your initial responses. Copy and paste the questions you decide to answer in bold type. It is a good idea to select questions to which you do not know the answer or would like to understand better. Also, be bold and answer a question you have not seen a classmate answered yet.

1. How      does a variable interest entity differ from a traditional corporate      business entity? Be specific.
2. What      major criteria must be met before a company is consolidated? Again, be      specific, referring to the Codification where necessary.
3. What      types of entities are referred to as special-purpose entities, and how      have they been generally used?
4. What      is meant by indirect control? Give an illustration or an example.
5. Explain      the differences between consolidated and combined financial statements. Be      specific.
6. What      is meant by a noncontrolling interest in a subsidiary?
7. What      must be done if the fiscal periods of the parent and the subsidiary are      not the same?
8. When      is consolidation considered inappropriate even though the parent company      holds a majority of the voting common shares of another company?
9. Are      consolidated financial statements likely to be more useful to the      creditors of the parent company or the creditors of the subsidiaries? Why      or why not?
10. What      characteristics are normally examined in determining whether a company is      a primary beneficiary of a variable interest entity?

Include in bold type in your initial response the above question(s) you are answering.

Chapter 3 in Advanced Financial Accounting

Deloitte. (2018). A roadmap to consolidationIdentifying a controlling interest. Retrieved from https://www2.deloitte.com/us/en/pages/audit/articles/a-roadmap-to-consolidation-identifying-a-controlling-financial-interest.html

Jones, R. C. (2018, August). Common control entities and consolidation of variable interest entities. The CPA Journal. Retrieved from https://www.cpajournal.com/2018/08/15/common-control-entities-and-consolidation-of-variable-interest-entities/

Chapter 3 in Advanced Financial Accounting, PowerPoint presentation

Lange, C. D., & Fornaro, J. M. (2017). Consolidation of variable interest entities for private companies. CPA Journal, 87(2), 46-50.

PWC. (2015). A comprehensive guide to consolidation and equity method of accounting under U.S. GAAP. Retrieved from https://www.pwc.com/us/en/cfodirect/publications/accounting-guides/consolidation-framework-equity-method-accounting-vie-guide.html

PWC. (2016, January 19). In depth: New consolidation standardUpdated insights. Retrieved from http://www.pwc.com/us/en/cfodirect/publications/in-depth/new-consolidation-standard-fasb-guidance-adoption-updated-insights-us2015-08.html