Consolidated Financial Statements Are Appropriate Even Without a Majority Ownership

question 8

Multiple Choice

Consolidated financial statements are appropriate even without a majority ownership if which of the following exists:

• A) the subsidiary has the right to appoint members of the parent company's board of directors.
• B) the parent company has the right to appoint a majority of the members of the subsidiary's board of directors through a large minority voting interest.
• C) the subsidiary owns a large minority voting interest in the parent company.
• D) the parent company has an ability to assume the role of general partner in a limited partnership with the approval of the subsidiary's board of directors.

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Definitions:

Small Business

Any independently owned and operated business that is not dominant in its competitive area and does not employ more than 500 people.

Competitive Area

The space or domain in which businesses compete against each other for market share.

Independently Owned

Refers to a business or property that is owned by an individual or a group without corporate or external control.