Business Finance Homework Help

Assignment Question(s): (Marks 5)

• Accounting for Securitization under SFAS No. 140 (2000) is a limited attempt to describe complex transactions that are structured to yield desired economic and accounting outcomes. This accounting raises three issues for users of financial reports. State these three issues.
• The vast majority of SPEs are VIEs, however VIEs need not be SPEs. Explain this statement. Also state the conditions that define an entity as VIE. (0.5 + 1.5 Marks)
• The sensitivity approach requires that the firm provide an estimate of the loss of value, earnings, or cash flow caused by a specific adverse movement in each market price or rate. Sensitivity Approach also has some strength and some weakness. Discuss the strength and weakness of Sensitivity Approach. (1.5 Marks)

(1.5 Marks)