Asked by Natasha Rodriguez on Jun 24, 2024
Verified
When deciding whether or not one entity controls another entity:
A) the controlling entity must be actively involved in the decision making of the other entity.
B) the controlling entity must have exercised its power to control.
C) it is sufficient that the controlling entity has the capacity to control.
D) the controlling entity must have exerted its control over the financing policies of the other entity.
Decision Making
The process of selecting the best course of action among several alternatives.
Capacity to Control
The power to direct the financial and operating policies of an entity so as to obtain benefits from its activities.
- Comprehend the principle and assessment of control within the framework of consolidated financial statements.
Verified Answer
MF
Marie ForgesJun 28, 2024
Final Answer :
C
Explanation :
Control can be established based on the capacity to control, even if that power has not been actively exercised. This includes the potential to govern the financial and operating policies of an entity through ownership, contract, or other means.
Learning Objectives
- Comprehend the principle and assessment of control within the framework of consolidated financial statements.
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