When a parent acquires 100% of the voting stock of a subsidiary, that subsidiary:
A) lives on as a separate legal entity
B) continues to exist as an accounting entity, but it ceases to exist in any legal form
C) ceases to exist as a separate legal entity, but it is still accounted for as a separate accounting entity
D) automatically becomes part of one large legal entity that consists of the parent and the subsidiary together

Question

Quizplus · Accepted Answer

When a parent acquires 100% of the voting stock of a subsidiary, the subsidiary continues to live on as a separate legal entity. The acquisition does not change the subsidiary's legal status, although it may be fully controlled by the parent company.

When a Parent Acquires 100% of the Voting Stock of a Subsidiary