A subsidiary can be excluded from consolidation if
A)control does not rest with the majority owner.
B)the subsidiary is in legal reorganization.
C)the subsidiary is operating under severe foreign-exchange restrictions.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

All of the given options can result in a subsidiary being excluded from consolidation. If control does not rest with the majority owner, then the subsidiary cannot be consolidated as it is not a subsidiary as per the definition. If the subsidiary is in legal reorganization, it may not be possible to exercise control, and hence, it cannot be consolidated. Similarly, if the subsidiary is operating under severe foreign-exchange restrictions, it may not be possible to exercise control, and hence, it cannot be consolidated.

A Subsidiary Can Be Excluded from Consolidation If