When an investor owns more than 50% of the common shares of another company
A)consolidated financial statements are usually prepared.
B)the fair value model is used.
C)the investor is called a subsidiary.
D)the investor recognizes revenue only when dividends are received.

Question

Quizplus · Accepted Answer

When an investor owns more than 50% of the common shares of another company, it is considered a controlling interest and consolidated financial statements are usually prepared. This means that the financial statements of the two companies are combined into one comprehensive set of financial statements. This enables investors and stakeholders to get a clearer picture of the financial health and performance of the overall entity. The fair value model and revenue recognition are not directly related to ownership percentage.

When an Investor Owns More Than 50% of the Common