Multiple Choice Questions
1. ABC Corporation has a financial relationship with XYZ Company, but does not have an equity interest in XYZ. Should ABC consolidate XYZ? Which statement below is true concerning U.S. GAAP and IFRS on this question?
a. IFRS requires XYZ to be identified as a VIE, and then requires consolidation if ABC controls XYZ.
b. There is no significant different in the standards; both require consolidation if XYZ is a VIE and ABC controls XYZ.
c. There is no significant difference in the standards; both require consolidation if ABC controls XYZ.
d. U.S. standards require XYZ to be identified as a VIE, and then require consolidation if ABC controls XYZ.
2. PX Company owns 40% of the equity of SC Corporation. Which statement is true concerning the choice of whether PX should consolidate SC, following IFRS?
a. PX should always consolidate SC.
b. PX should never consolidate SC.
c. PX should consolidate SC if the other 60% of SC's stock is held by thousands of shareholders with less than 1% ownership each.
d. PX should consolidate SC if the other 60% of SC's stock is held by thousands of shareholders with less than 1% ownership each, decisions are made based on majority vote, and on average 85% of votes are cast at SC shareholders' meetings.