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Financial statement presentation and disclosures - Essay Example
Finance & Accounting
Pages 5 (1255 words)
Financial Statement Presentation and Disclosures Name of Student University Introduction: Off balance sheet transactions, Variable-Interest Entities, and Non controlling Interest Off Balance Sheet Transactions: It is a form of financing method where the large capital expenditures are not disclosed in the balance sheet presentation through varied classification methods…
The financial deals and agreements will have a positive material effect on the company. They will be not presented in the balance sheet because they do not affect the borrowing capacity and these activities hide a certain amount of liability. Variable-Interest Entities: It is a concept which is introduced in the US Financial Accounting Standards in FIN 46 which refers to the entity (investee) in which the investors holds a certain amount of controlling interests which is not based on majority of the voting rights. It is almost synonymous to the concept of the special purpose entity. It is subject to the consolidation of certain financial conditions related to the variable interests. It is the primary beneficiary of the 7E which is defined as the person with a company with a majority of variable interest (Madura, 2007). Non controlling Interest: Non controlling interest refers to the ownership stake in a corporation in which the required position gives the investor the chance to understand the way the company operates. Majority of the positions held by the investors are deemed to be non controlling interests because their ownership stake is very much insignificant relative to the total outstanding shares. ...
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