Consolidated Financial Statements and Variable Interest Entities"
Per the textbook, some investors (e.g., Warren Buffet) have contended that
the U.S. GAAP treatment undervalued the parent’s investment carrying value for
post-control step acquisitions. Construct one (1) argument in which you provide
at least two (2) reasons for the U.S. GAAP treatment of reporting additional
investments in subsidiaries when the parent previously established control.
Provide support for your rationale.
Determine the main characteristics of a variable interest entity (VIE).
Evaluate the usefulness to investors of the inclusion of VIEs in the company’s
consolidated financial statements. Provide support for your rationale.