Part 1 of 2, In ½ a page answer the following: investigate the effects of complex ownership on the consolidated financial statements. What is a variable interest entity (VIE)? When does a variable interest entity need to be consolidated? How does a VIE resemble a special purpose entity (SPE)? Where have you heard the term SPE before? Hint: Enron scandal used SPE
Part 2 of 2, in ½ a page answer the following: explain the complexities of intra-entity transactions. Can a company recognize a gain or loss on retirement of debt if the debt is retired internally? What is the rationale for or against recognizing the gain or loss?