Which of the following best illustrates a parent-subsidiary relationship? a) Com

Question

Which of the following best illustrates a parent-subsidiary relationship?

a) Company A owns 55% of the outstanding voting shares of Company B. They have the right to appoint 8/10 members of the board of directors of Company B, however they choose not to get involved in the day-to-day operations of Company B.

b) Company A owns 75% of the outstanding shares of Company B and they have the right to appoint 1/10 members of the board of directors of Company B.

c) Company A and Company B have set up a separate entity that they each jointly control.

d) Company A owns 45% of the outstanding shares of Company B and provides accounting function assistance as their controller quit during the year.

Explanation / Answer

a) Company A owns 55% of the outstanding voting shares of Company B. They have the right to appoint 8/10 members of the board of directors of Company B, however they choose not to get involved in the day-to-day operations of Company B.

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