Question

An associate company, in relation to another company, means:

• A. a company in which another company has a significant influence, but which is a subsidiary of the company having such influence and includes a joint venture company
• B. a company in which that other company has a significant influence, but which is not a subsidiary company of the company having such influence and includes a joint venture company
• C. a company in which that other company has a significant influence, but which is not a subsidiary company of the company having such influence and does not include a joint venture company
• D. a company in which that other company has full shares, and is a subsidiary company of the company having such influence and includes a joint venture company

Hint:

An associate company is one in which another company has significant influence but does not control it and may include a joint venture company.

Answer 1

The Correct Option is B

Step 1: Understanding the definition of an associate company.
An associate company is one in which another company holds significant influence but does not have control over it (i.e., not a subsidiary). The company with significant influence may also include a joint venture relationship.
Step 2: Explanation of the options.
- (a) This is incorrect because it mentions that the company is a subsidiary of the company with significant influence, which contradicts the definition of an associate company.
- (b) This is the correct answer, as it accurately defines an associate company as one in which another company has significant influence, but is not a subsidiary and may include a joint venture company.
- (c) This option is incorrect because it excludes the possibility of a joint venture company, which is part of the definition.
- (d) This option is incorrect because it describes a company that has full shares in another company, which would be classified as a subsidiary, not an associate.
Step 3: Conclusion.
Thus, the correct answer is (b) a company in which that other company has a significant influence, but which is not a subsidiary company of the company having such influence and includes a joint venture company.