In a consolidated group of entities, control over the subsidiaries in the group:
A) may not be shared control.
B) can be shared with other entities.
C) requires 100% ownership of the subsidiaries' shares.
D) can exist where the rights are purely protective rights.

Question

Quizplus · Accepted Answer

Control in a consolidated group implies that the parent company has the ability to govern the financial and operating policies of a subsidiary so as to benefit from its activities. This control is typically not considered shared control, as shared control would imply a joint arrangement, not a parent-subsidiary relationship. Control does not require 100% ownership—more often, it is achieved through a majority of voting rights. Protective rights are designed to safeguard an investor's interest rather than establish control.

In a Consolidated Group of Entities, Control Over the Subsidiaries