Financial statement presentation and disclosures Essay

Financial statement presentation and disclosures - Essay ExampleThe financial deals and agreements willing defy a positive material effect on the comp all. They will be not presented in the match sheet because they do not affect the acceptation 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 prevail over to the consolidation of certain financial conditions related to the shifting 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 corp oration in which the required position gives the investor the chance to construe 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 large(p) shares. Disclosure Off balance sheet legal proceeding, Variable-Interest Entities, and Non controlling Interest Off balance sheet transactions The Company engages in varied financial transactions which should comply with the US GAAP principles that are not recorded in the company financial statements. These financial transactions involve the varying degrees, assign, interest rate, elements of credit and liquidity risk. These transactions are used to manage the request of customers in the form of funding, letters of credit and loan commitments. Firstly, to know what are the elements in the glum balance sheet transactions, critically analyze them and their arrangements. Secondly, to assess the l ikelihood of the occurrences of an unknown trend, commitment, demand and any event or uncertainty that could affect the off balance sheet arrangement and thirdly, the assessment would be required to conclude about the management trend. This would help in assessment of the uncertainty of the variables and would also help in arrangement of the off balance sheet elements and variables. The following items are necessary for the disclosure of certain items like The nature and the business purpose if the companys off balance sheet arrangement for the variables (Groppelli & Nikbakht, 2006). The importance of the companys off balance sheet arrangement of the variables with respect to the liquidity, capital resources, credit risk, merchandise risk and the support of some benefits (Hall, 2007). The amount and nature of the interests retained, issues securities other form of indebtedness that is incurred by the company in connection with the arrangements The amount and nature of any amount of obligation or liabilities of the company that arise out of the arrangements that are likely to become material Any known event, demand , uncertainty that will result in the termination of or reduction of material benefits that the company has proposed Variable-Interest Entities The variable entity model does not apply because the enterprise is being evaluated or unify for the traditional operating entity. As per the Accounting Standards Codifications