When an investor company gains control of a subsidiary company, which of the fol

Question

When an investor company gains control of a subsidiary company, which of the following is correct?

i. The investor company must consolidate the financial statements of the investor company, subsidiary company, and the non-controlling interest company.

ii. The investor company must include in the consolidation, the income and equity attributable to the Non-controlling interest.

iii. The investor company consolidates its own financial statements and the financial statements of all the subsidiary companies that it controls.   

Select one:

a. i. only

b. ii. only

c. i and ii

d. ii and iii

e. The type or class of customer.

Explanation / Answer

When an investor company gains control of a subsidiary company,

The investor company must include in the consolidation, the income and equity attributable to the Non-controlling interest.

The investor company consolidates its own financial statements and the financial statements of all the subsidiary companies that it controls.   

Thus, the answer is ii and iii.

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