Anderson incorporated his new company,Pearl,Inc. ,in the business of manufacturing rubber.After some years,he opened his own subsidiary rubber manufacturing company.The new subsidiary company is a success.Meanwhile,the workers of Pearl,Inc.claimed that payment of bonus is due and they are demanding the same from the subsidiary company.In this case,are both Pearl,Inc.and its subsidiary liable?

A) Yes,they are liable because it is provided under corporation law.
B) Yes,they are liable because both are the same entity in the eyes of the law.
C) No,they are not liable because it is not a subsidiary of Pearl,Inc.
D) No,they are not liable because a subsidiary is not liable for parent's debts as provided under the law.

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payton dorsch · Accepted Answer

Final Answer : D, Explanation :  Ordinarily,the parent is liable for its own obligations and the subsidiary is liable for its own obligations,but the parent is not liable for its subsidiary's debts and the subsidiary is not liable for the parent's debts.

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