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CS Executive · Corporate Accounting and Financial Management · Consolidation of Accounts

Under both Ind AS 110 and AS 21, a subsidiary is defined as:

A subsidiary is an entity that is controlled by another entity, called the parent. Control, not 100% ownership, significant influence or a common director, is the test. Significant influence alone would make the investee an associate rather than a subsidiary.

  1. AAn entity in which another entity holds exactly 100% of the equity shares
  2. BAn entity that is controlled by another entityCorrect
  3. CAn entity over which another entity has only significant influence
  4. DAn entity that has a common director with another entity

Explanation

The standards define a subsidiary as an entity (enterprise in AS 21) that is controlled by another entity, known as the parent. Significant influence leads to an associate, not a subsidiary, so option 3 is wrong. Full ownership is not required.

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