What does primary beneficiary mean on the CPA exam?
Primary beneficiary. The party that must consolidate a variable interest entity: the one with power over its significant activities AND exposure to losses or returns that could be significant.
Defined against ASC 810-10-25-38A.
Which CPA exam sections use primary beneficiary?
Primary beneficiary appears in the BAR section of the CPA exam.
Other terms defined against ASC 810-10
- noncontrolling interest: The share of a subsidiary that the parent does not own.
- variable interest entity: An entity that cannot fund itself without further support, or whose equity holders lack the usual powers.
Related terms
- equity method: Used when the investor can exercise significant influence, presumed at 20% or more of the voting stock.
- service organization: A third party whose processing affects a user entity's financial reporting, such as a payroll bureau or a claims processor.