Question

Corporation Parent (P)owns 85 percent of Corporation A1; Corporation A1 owns 60 percent of Corporation A2; Corporation A2 owns 90 percent of A3; Corporation A3 owns 60 percent of Corporation A4 and 15 percent of Corporation A2; Corporation A4 owns 100 percent of Corporation A5. Identify the consolidated group(s) of corporations. a. P-­?A1-­?A2-­?A3-­?A4-­?A5 b. P-­?A1 only c. P-­?A1and A2-­?A3-­?A4-­?A5 d. P-­?A1; A2-­?A3; and A4-­?A5 e. P-­?A1 and A2-­?A3

Answer 1

Consolidated group of corporations consists of ultimate parent company and its subsidiaries.

Subsidiary corporation of Subsidiary is also a subsidiary of Holding Corporation.

Subsidiary: It is a company in which holding company owns more than 50% of common stock.

Corporation Parent (P) owns 85% of A1. So P and A1 are group.

A2 is a subsidiary of A1. So P, A1 and A2 are group.

A3 is a subsidiary of A2 and so P, A1, A2, A3 are group.

A4 is a subsidiary of A3 and A5 is a subsidiary of A4.

So all together P,A1,A2,A3,A4,A5 forms part of consolidated group of Corporations.

So the answer is Option A.