When deciding whether or not one entity controls another entity:
A) the controlling entity must be actively involved in the decision making of the other entity.
B) the controlling entity must have exercised its power to control.
C) it is sufficient that the controlling entity has the capacity to control.
D) the controlling entity must have exerted its control over the financing policies of the other entity.

Question

Quizplus · Accepted Answer

Control can be established based on the capacity to control, even if that power has not been actively exercised. This includes the potential to govern the financial and operating policies of an entity through ownership, contract, or other means.

When Deciding Whether or Not One Entity Controls Another Entity