Question
Bullworks sponsors the establishment of BR corporation.Bullworks sells its receivables to BR which is a special purpose entity.Other information: 1) Bullworks owns 5% of the
Bullworks sponsors the establishment of BR corporation.Bullworks sells its receivables to BR which is a special purpose entity.Other information:
1) Bullworks owns 5% of the owners equity of BR.Rodeo Corporation owns the remaining 95%.
2) Owners equity constitutes 3% of the total assets of BR, the remaining 97% of total assets is financed through debt securitized by the receivables that Bullworks sells to BR.
Circumstance 1 (Circumstance 2 is in the next question)
Rodeo guarantees all of BR's debt.Rodeo appoints 10 of the 11 board members of BR with Bullworks appointing the remaining one member.
A.Explain if BR is a variable interest entity or not.Support your answers using the facts above.
B.Explain whether Bullworks or Rodeo must consolidate BR? Support your explanation with facts.
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Understanding Basic Statistics
Authors: Charles Henry Brase, Corrinne Pellillo Brase
6th Edition
978-1133525097, 1133525091, 1111827028, 978-1133110316, 1133110312, 978-1111827021
