Gale Company owns 87% of the outstanding stock of Leonardo Company. Leonardo Company is referred to as the
A) parent
B) minority interest
C) affiliate
D) subsidiary

Question

Quizplus · Accepted Answer

According to the question, Gale Company owns 87% of the outstanding stock of Leonardo Company. When a company owns more than 50% of the outstanding stock of another company, it has control over the other company. In this case, since Gale Company owns 87% of Leonardo Company, it has control over Leonardo Company. Thus, Leonardo Company is a subsidiary of Gale Company.

Gale Company Owns 87% of the Outstanding Stock of Leonardo