Question：In which one or more of the following situations is S a subsidiary of P?
A. P holds 49% of the voting rights of S and controls its board.
B. P has control over company S in cooperation with company R, which owns 50% of S.
C. P has power to govern the financial and operating policies of S under an agreement.
D. P has a 25% interest in S and exercises significant influence over S’s operating and financial policy.
The correct answers are:
P holds 49% of the voting rights of S and controls its board; and P has power to govern the financial and operating policies of S under an agreement.
Both of these scenarios fall within the IAS 27 definition of a subsidiary.
Joint control does not create a subsidiary under IAS 27; it creates a joint venture under IAS 31.