FRA Topic Test Langer - Gain/Loss reducing retained earnings

CFA Level II FRA
#1

can someone help me to explain why if it is VIE, consolidation will reduce $30 (Gain) from NI and the retained earnings?

#2

up

#3

i cannot see the question, but maybe they are testing whether the VIE consolidates or not. Look at what interest the entity in question has in the VIE, and any financial information given on the VIE.

#4

there is a gain of $30 if the VIE sold, and in the provided financial statement (NI and RE) the gain is included. if the sale of VIE is not go thru, the NI and RE will reduce by $30. I can understand if NI reduced but why RE also reduced?

#5

Because the gain in NI will then hit RE isn’t it? RE=begin+NI-divd

#6

thanks!