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Only one entity can be the primary beneficiary of a variableinterest entity. III. The investor that has the greatest equity
ownership in a variable-interest entity will be the primary
beneficiary of the entity.
Question 14
Sun Co. is a wholly owned subsidiary of Star Co. Both
companies have separate general ledgers, and prepare separate
financial statements. Sun requires stand-alone financial
statements. Which of the following statements is correct?
Question 15
P Co. purchased term bonds at a premium on the open market.
These bonds represented 20 percent of the outstanding class of
bonds issued at a discount by S Co., P's wholly owned
subsidiary. P intends to hold the bonds until maturity. In a
consolidated balance sheet, the difference between the bond
carrying amounts in the two companies would be
Question 16
In which of the following circumstances of a business
combination, if any, could the recognition of a gain occur at the
time of the combination?
Question 17
Aceco has significant investments in three separate entities.
These investments are: Which of Aceco's investments would be
consolidated with Aceco in its consolidated financial
statements?