(Answered) Some accounting theorists propose that firms should

Finance

Some accounting theorists propose that firms should consolidate any entity in which they have a "controlling financial interest." Typically, the percentage of equity ownership that one firm has in another entity determines whether consolidation is appropriate, with greater than 50 percent ownership requiring consolidation.

Why is the percentage of ownership criterion often not appropriate for judging whether a VIE should be consolidated? What criterion is used to determine whether a VIE should be consolidated?

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