Consolidated Financial Statements Are Appropriate Even Without a Majority Ownership

question 17

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 because other ownership interests are widely dispersed.
• 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:

Intrinsic Value

The inherent worth of something based on its qualities and utility, independent of external factors like market conditions.

Private Placement Situation

A method of raising capital through the sale of securities to a relatively small number of select investors rather than through a public offering.

SEC

Securities and Exchange Commission, a U.S. government agency that oversees securities transactions, activities of financial professionals, and the stock and options exchanges.

Issuers

Entities that create and issue financial securities, such as stocks and bonds, to finance operations, expand their business, or undertake new projects.