A Ltd owns 80% of B Ltd and B Ltd owns 60% of C Ltd.Using the sequential consolidation method,the sequence of consolidation would be:
A) A with B and then consolidated A with C.
B) B with C and then consolidated B with A.
C) A, B and C together.
D) none of the above.

Question

Quizplus · Accepted Answer

The sequential consolidation method involves consolidating the subsidiary closest to the ultimate parent first, and then consolidating the intermediate subsidiary. In this case, B Ltd is the subsidiary closest to the ultimate parent A Ltd, so B with C should be consolidated first, followed by the consolidation of B Ltd with A Ltd. Therefore, the correct sequence of consolidation is B with C and then consolidated B with A.

A Ltd Owns 80% of B Ltd and B Ltd