Brown Ltd acquired 21% of the issued share capital of Dockers Ltd.Brown Ltd does not have significant influence or control over the operating policies of Dockers Ltd, but it does have significant influence over the financial policies of Dockers Ltd.Dockers Ltd is a/an _________________ of Brown Ltd.
A)investment
B)partner
C)associate
D)subsidiary

Question

Quizplus · Accepted Answer

An investment is the correct classification for Dockers Ltd in relation to Brown Ltd because Brown Ltd does not have control or significant influence over the operating policies of Dockers Ltd, which are key criteria for classifying entities as associates or subsidiaries. The influence over financial policies does not change this classification.

Brown Ltd Acquired 21% of the Issued Share Capital of Dockers