Discussion: Consolidated Financial Statements and Variable Interest Entities
1. Per the textbook, some investors (e.g., Warren Buffet) have contended that the U.S. GAAP treatment undervalued the parent's investment carrying value for post-control step acquisitions. Construct one argument in which you provide at least two reasons for the U.S. GAAP treatment of reporting additional investments in subsidiaries when the parent previously established control. Provide support for your rationale.
2. Determine the main characteristics of a variable interest entity (VIE). Evaluate the usefulness to investors of the inclusion of VIEs in the company's consolidated financial statements. Provide support for your rationale.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.