You graduated and took your first position with a public accounting firm. While at a client (Soroka, Inc.), you discover documentation regarding several ventures. After careful research, you assess that Soroka, Inc. is the primary beneficiary of a variable interest entity. You are wondering how this may impact the financial statements. Your teammate, Nicole, thinks that you should issue combined financial statements whereas you think you should issue consolidated financial statements.

Conduct appropriate research and provide a short memo with specific Codification citations regarding who is correct, you or Nicole.