Understanding Subsidiaries and Consolidation

holding company is:

• A company that is held by others

• A company that holds shares in other companies

• A company that has no liabilities

• A company that manufactures goods

A subsidiary company is:

• Independent of all other companies

• Owned partially by a holding company

• Controlled by another company

• Listed in stock market

When a company controls more than 50% of the voting power in another company, it is called:

• Sister company

• Associate company

• Holding company

• Parent company

Which of the following cannot be a subsidiary?

• A foreign company

• A government company

• A company owning more than it is owned

• A partnership firm

A subsidiary company must:

• Hold shares of the parent

• Have less than 50% of its voting rights held by another company

• Be controlled by the holding company

• Not have a balance sheet

As per Companies Act, consolidated financial statements are:

• Optional

• Required for all companies

• Required if there is at least one subsidiary

• Prohibited in India

Consolidated financial statements present:

• Separate entities

• Joint venture data only

• A single economic entity

• Tax computations

Which law governs the preparation of consolidated financial statements in India?

• SEBI Act

• Companies Act, 2013

• FEMA

• Income Tax Act

Section 129 of the Companies Act, 2013 deals with:

• Filing tax returns

• Holding AGMs

• Financial statements of companies

• Capital structuring

Companies must consolidate the accounts of:

• Only domestic subsidiaries

• All subsidiaries, regardless of location

• Only listed subsidiaries

• Associates only