In using Nestle Corporation as a model, when a subsidiary is first formed, about one-half of the financing needed to acquired fixed assets comes from:
A)debt
B)federal funds
C)tax breaks
D)equity from the parent company

Question

Quizplus · Accepted Answer

When a subsidiary is formed, about one-half of the financing needed to acquire fixed assets comes from equity from the parent company. This is because the parent company has the resources to provide the needed capital and also wants to maintain control over the subsidiary's operations. The use of debt or federal funds may not be feasible or preferred, and tax breaks are not a direct source of financing.

In Using Nestle Corporation as a Model, When a Subsidiary