When deciding whether or not one entity controls another entity:
A) the controlling entity must have exercised its power to control.
B) it is sufficient that the controlling entity has the capacity to control.
C) the controlling entity must be actively involved in the decision making of the other entity.
D) the controlling entity must have exerted its control over the financing policies of the other entity.

Question

Quizplus · Accepted Answer

The concept of control in the context of determining whether one entity controls another is based on the capacity to control, rather than the actual exercise of power, active involvement in decision-making, or exertion of control over financing policies. This means that if an entity has the rights or means to direct the relevant activities of another entity, it is considered to have control, regardless of whether these rights are actively exercised.

When Deciding Whether or Not One Entity Controls Another Entity