Company M controls company N.Both companies are large proprietary companies with no creditors and have annual turnover less than $2 million.Which statement is likely to be correct?

Question

Quizplus · Accepted Answer

Both M and N are described as "large proprietary companies," which means they are separate legal entities and must prepare financial statements in accordance with accounting standards, making them accounting entities. Additionally, since M controls N, it is likely that M meets the definition of a reporting entity, which is a concept used to determine whether an entity's financial statements are required to be prepared in accordance with general purpose financial reporting frameworks. However, there is not enough information provided to determine whether N meets the definition of a reporting entity.

Company M Controls Company N