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Basic Question 0 of 9
Using a narrowly defined rule on consolidation of SPEs for a leasing transaction to justify non-consolidation of SPEs in other types of transactions results in a low quality of earnings. This is an example of ______.
B. using loopholes or bright-lines in accounting principles to structure transactions to achieve a desired outcome that differs from the economic structure of the transaction
C. using unrealistic or inappropriate estimates and assumptions to achieve a desired outcome
D. stretching accounting principles to achieve a desired outcome
A. following GAAP but selecting alternatives within GAAP that bias or distort reported results to achieve a desired outcome
B. using loopholes or bright-lines in accounting principles to structure transactions to achieve a desired outcome that differs from the economic structure of the transaction
C. using unrealistic or inappropriate estimates and assumptions to achieve a desired outcome
D. stretching accounting principles to achieve a desired outcome
User Contributed Comments 1
| User | Comment |
|---|---|
| vatsal92 | A. No GAAP priciple is mentioned. B. Second best choice as the economic structure is changed C. No estimates are made D. Applicabilty of non-applicable principle, hence more correct than B. |
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Learning Outcome Statements
describe the qualitative and quantitative factors used to evaluate a corporate borrower's creditworthiness
CFA® 2025 Level I Curriculum, Volume 4, Module 16.