Asked by Charlease Jordan on May 21, 2024
Verified
If a parent company has two wholly owned subsidiaries how many legal and economic entities are there from the viewpoint of the shareholders of the parent company? Legal ‾ Economic ‾\begin{array}{ll} \underline{\text { Legal }} & \underline{ \text { Economic }} \\\end{array} Legal Economic
A) 33\begin{array}{ll}3 &&&& 3 \\\end{array}33
B) 12\begin{array}{ll}1 &&&& 2 \\\end{array}12
C) 31\begin{array}{ll}3 & &&&1 \\\end{array}31
D) 21\begin{array}{ll}2 &&&& 1\end{array}21
Legal Entities
Organizations or structures that are recognized by law as having rights and responsibilities, such as corporations, partnerships, and sole proprietorships.
Economic Entities
Organizations or units that engage in economic activities, recognized as separate from their owners.
Wholly Owned Subsidiaries
Companies whose entire share capital is 100% owned by another company, the parent company.
- Understand the impact of varying degrees of ownership on the compilation of consolidated or affiliated financial statements.
Verified Answer
Learning Objectives
- Understand the impact of varying degrees of ownership on the compilation of consolidated or affiliated financial statements.
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