Question

Parco has the following three subsidiaries: Finco, Serco, and Euroco. Finco is a 100% owned finance subsidiary. Serco is an 80% owned service company. Euroco is a 100% owned foreign subsidiary that conducts operations in Western Europe. Which one of the following is the most likely number of entities, including Parco, to be included in Parco's consolidated financial statements?

A. One.B. Two.C. Three.D. Four.

Answer 1

D. Four

Step-by-step explanation:

A consolidated financial statement includes financial information of all commonly-owned business. In this case, Parco has full ownership of two subsidiaries, and four-fifths of the service company. Parco has then control over the three entities and therefore, they should be included in the consolidated financial statements.