Parent Ltd owns 20% of S1 Ltd and 80% of S2 Ltd.In addition,S2 Ltd owns 70% of S1 Ltd.The total Parent Ltd interest in S1 Ltd is:
A) 20%
B) 76%
C) 56%
D) none of the above

Question

Quizplus · Accepted Answer

To determine the total Parent Ltd interest in S1 Ltd, we need to add the direct and indirect holdings.

Parent Ltd directly owns 20% of S1 Ltd, and S2 Ltd owns 70% of S1 Ltd. Therefore, the indirect holding of Parent Ltd in S1 Ltd through S2 Ltd is:

70% of S1 Ltd x 80% of S2 Ltd = 56% of S1 Ltd

Now we can add the direct and indirect holdings:

20% of S1 Ltd + 56% of S1 Ltd = 76% of S1 Ltd

Therefore, the total Parent Ltd interest in S1 Ltd is 76%. Therefore, the correct answer is option B.

Parent Ltd Owns 20% of S1 Ltd and 80% of S2