A subsidiary can be excluded from consolidation if
A)control rests with the majority owner.
B)formation of joint ventures.
C)the acquisition of an asset or group of assets constitutes a business.
D)acquisition of a not-for-profit entity by a for-profit business.

Question

Quizplus · Accepted Answer

A subsidiary can be excluded from consolidation if it is part of a joint venture arrangement where control is shared among two or more parties. In such a scenario, the subsidiary's financial statements may be presented as an investment in the joint venture rather than consolidated with the parent company's financial statements. Control by the majority owner (A) is typically an indication that consolidation is required. The acquisition of an asset or group of assets that constitute a business (C) would result in consolidation if the parent company has control over the assets. The acquisition of a not-for-profit entity by a for-profit business (D) would not automatically result in an exclusion from consolidation.

A Subsidiary Can Be Excluded from Consolidation If