Which of the following is not a reason for an entity's preference to have less than 100% ownership interest in some subsidiaries:
A) to decrease the cash necessary to acquire the control over the subsidiaries.
B) to incentivise the subsidiary's executives by allowing them to hold a non-controlling interest.
C) to comply with regulatory requirements.
D) to receive the whole gain on acquisition.

Question

Quizplus · Accepted Answer

Having less than 100% ownership interest in some subsidiaries means that the entity will not receive the whole gain on acquisition. Therefore, option D is not a reason for an entity's preference to have less than 100% ownership interest in some subsidiaries. Options A, B, and C are valid reasons for an entity to prefer less than 100% ownership interest in subsidiaries.

Which of the Following Is Not a Reason for an Entity's