Mock 2012 morning Q44

aco · May 30, 2012, 12:41pm

In the explanation they claim the net income rises by $30M.

However the case is that this income comes from the sale of asset to controlled entity (i.e. a VIE that the company is primary beneficiary of). And we know the company cannot recognize the income from such transaction with an associate (look in book 2 page 138-139).

So in my opinion the net income is unaffected and C answer is correct, what do you think?

nospe690 · May 30, 2012, 12:53pm

The 2011 values are reported as if the sale occured, if it hadn’t you would be right.

nycag04 · May 30, 2012, 12:54pm

I missed this too, for the same reason.

aco · May 30, 2012, 1:02pm

Well if I got right you guys:

The question assumes that Aubry is right and the SPE is not VIE. It means you have to assume the SPE is not consolidated nor significantly controlled in any way.