Two enterprises own 100% of the common stock of a VIE [A own 60%, B owns 40%]. Income is shared proportional to stock ownership. Each has 3 votes on a six person board. The board makes all decisions affecting the VIEs policies and practices. Based only on these facts, why would A account for its ownership interest in the VIE using the equity method instead of consolidating the VIE?

Answer rating: 100% (QA)

Based on the given facts A would account for its ownership interest in the Variable Interest Entity ... View the full answer