A subsidiary is defined as an entity that is controlled by another company. Three criteria must be present in order for there to be control. The parent must have all of the following except:
A)The ability to direct the financial and operating policies of another company.
B)The ability to obtain returns from another company.
C)The ability to use its power to affect the returns from another company.
D)The ability to issue any class of securities in a public market on behalf of another company.

Question

Quizplus · Accepted Answer

The ability to issue any class of securities in a public market on behalf of another company is not one of the criteria for control over a subsidiary. The three necessary criteria are the ability to direct financial and operating policies, the ability to obtain returns, and the ability to use power to affect returns.

A Subsidiary Is Defined as an Entity That Is Controlled