Which statement is correct about subsidiaries?
A)An arrangement where one party has the power to participate in the financial and operating policy decisions of another entity.
B)An arrangement where one entity governs the financial and operating policies about another entity.
C)A contractual arrangement whereby two or more parties share control over an economic activity and all strategic decisions requires unanimous consent by all parties.
D)An arrangement that gives rise to a financial asset for one entity and a financial liability or equity instrument for another entity.

Question

Quizplus · Accepted Answer

A subsidiary is a company that is controlled by another company, known as the parent company. In this arrangement, the parent company governs the financial and operating policies of the subsidiary, making choice B the correct statement about subsidiaries. Option A describes a joint venture, Option C describes a joint control arrangement and Option D describes a financial instrument.

Which Statement Is Correct About Subsidiaries