King Entity and Queen Entity each hold 40% of the shares of Jack Entity. An agreement between King and Queen requires that they must reach unanimous consent to make relevant decisions related to Jack. What type of relationship do King and Queen have with Jack?
A) King should consolidate Jack; Queen should use the equity method
B) Queen should consolidate Jack; King should use equity method
C) King and Queen should both consolidate Jack
D) King and Queen should both use equity method for exerting significant influence

Question

Quizplus · Accepted Answer

King and Queen each hold 40% of Jack and have an agreement requiring unanimous consent for decisions, indicating joint control. Therefore, they should both use the equity method, reflecting significant influence but not control.

King Entity and Queen Entity Each Hold 40% of the Shares