Gale Company owns 87% of the outstanding stock of Leonardo Company. Leonardo Company is referred to as the

A) parent
B) minority interest
C) affiliate
D) subsidiary

Question

Gale Company owns 87% of the outstanding stock of Leonardo Company. Leonardo Company is referred to as theA) parentB) minority interestC) affiliateD) subsidiary

Mohit Ravula · Accepted Answer

Final Answer : D, Explanation :  According to the percentage of ownership mentioned in the question, Gale Company owns a majority stake in Leonardo Company, making it a subsidiary. A subsidiary company is a company in which another company holds a controlling interest, which in this case is Gale Company owning 87% of outstanding stock. Therefore, the correct answer is option D - subsidiary. Options A and C are incorrect since these terms are used to describe companies that have a controlling interest in other companies, which is not the case with Gale Company and Leonardo Company. The term minority interest (option B) is used when a company owns less than 50% of another company's outstanding stock.

Gale Company owns 87% of the outstanding stock of Leonardo Company. Leonardo Company is referred to as the

A) parent
B) minority interest
C) affiliate
D) subsidiary

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