R Limited has control over another entity,S Limited.R Limited is referred to as:
A) an associate entity.
B) a parent entity.
C) a consolidated entity.
D) a minority shareholder.

Question

Quizplus · Accepted Answer

R Limited is referred to as the parent entity since it has control over S Limited. "Control" is defined as having the power to govern the financial and operating policies of an entity.

Option A is incorrect because an associate entity is an entity in which the investor has significant influence but not control.

Option C is incorrect because a consolidated entity refers to a group of entities that are treated as a single entity for financial reporting purposes.

Option D is incorrect because the term "minority shareholder" refers to a shareholder who owns less than 50% of the voting shares in a company, and is not relevant in this scenario where R Limited has control over S Limited.

R Limited Has Control Over Another Entity,S Limited