Assume That a Parent Company Has 4 Subsidiaries

question 13

Multiple Choice

Assume that a parent company has 4 subsidiaries.Under IFRS 3,which of the following statements is true?

• A)All 4 subsidiaries must be reported using the parent-company extension method.
• B)All 4 subsidiaries must be reported using the entity method.
• C)Each subsidiary must be reported using either the parent-company extension method or the entity method.Consistency is not required.
• D)All 4 subsidiaries must be reported using either the parent-company extension method or the entity method.Consistency is required.

---

Definitions:

Effective Income Tax Rate

The average percentage of their income that individuals or corporations pay in taxes, considering various deductions and exemptions.

Controlling Interest

Holding a majority of the voting stock or interest in a company, thereby having significant influence or control over its operations and decision-making.

Net Incomes

The total earnings of a company after deducting all expenses, taxes, and costs from its total revenues.