Accounting for Securitization under SFAS No. 140 (2000) is a limited attempt to describe complex transactions that
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Question:
- Accounting for Securitization under SFAS No. 140 (2000) is a limited attempt to describe complex transactions that are structured to yield desired economic and accounting outcomes. This accounting raises three issues for users of financial reports. State these three issues.
- The vast majority of SPEs are VIEs, however VIEs need not be SPEs. Explain this statement. Also state the conditions that define an entity as VIE.
- The sensitivity approach requires that the firm provide an estimate of the loss of value, earnings, or cash flow caused by a specific adverse movement in each market price or rate. Sensitivity Approach also has some strength and some weakness. Discuss the strength and weakness of Sensitivity Approach.
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