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When valuing a parent company that owns less than 100 percent of a subsidiary, the minority...

When valuing a parent company that owns less than 100 percent of a subsidiary, the minority interest holder of the subsidiary has a claim on the parent company’s assets. A. True B. False

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Expert Solution

When valuing a parent company that owns less than 100 percent of a subsidiary, the minority interest holder of the subsidiary has a claim on the parent company’s assets.

Answer: False

whenever a parent company owns a controlling interest in a subsidiary but does not own 100 percent, a minority interest exists, and they have a claim on the earnings and net assets of the subsidiary and not the Parent Company's Assets and earnings.

For eg:

if Co. A is the holding Co. (70% stake) of subsidiary Co. B, then the minority interests i.e. remaining shareholders (30% of total shares) will have a 30% claim on the earnings and net assets of the subsidiary i.e Co. B

jeff jeffy answered 1 year ago
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