Question

All of the following are examples of how a parent company may lose control over a subsidiary and discontinue future consolidation, except:

A) The parent sells some of its interest in the subsidiary.
B) The subsidiary issues additional common stock.
C) The subsidiary comes under the control of the government or other regulator.
D) The subsidiary issues a stock dividend or a stock split.

Answer 1

Options A, B, C, and D can lead to a loss of control except for option D, where the subsidiary issues a stock dividend or a stock split.

Step-by-step explanation:

In the context of parent companies losing control over subsidiaries and discontinuing future consolidation, all the options A, B, C, and D can potentially lead to a loss of control except option D, where the subsidiary issues a stock dividend or a stock split.

When a parent company sells some of its interest in a subsidiary (option A), it might result in a decrease in control. Similarly, when a subsidiary issues additional common stock (option B), it dilutes the parent company's ownership and control. If a subsidiary comes under the control of the government or other regulators (option C), the parent company might lose control or face restrictions on consolidation.