The U. S. corporation Fun Toys, Inc. sets up a firm in China. The parent company remains in the United States and retains complete ownership of the China branch as well as complete authority and control over all phases of the operation. This isa) A distribution Agreementb) A wholey owned subsidery c) A joint ventured) direct exporting

Question

Corbin Wheeler

Business

29 June, 11:46

The U. S. corporation Fun Toys, Inc. sets up a firm in China. The parent company remains in the United States and retains complete ownership of the China branch as well as complete authority and control over all phases of the operation. This isa) A distribution Agreementb) A wholey owned subsidery c) A joint ventured) direct exporting

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Aaliyah Cardenas · Answer 1

(A) A wholly owned Subsidiary

Explanation:

A wholly owned subsidiary is a company that is completely owned by another company called the Parent/Holding Company. The parent company will hold all (100%) of the subsidiary's common stock.

A wholly owned subsidiary allows the parent company to diversify, manage, and possibly reduce its risk.

Some of the disadvantages of a wholly owned subsidiary include the possibility of multiple taxation, lack of business focus, and conflicting interest between subsidiaries and the parent company if not properly managed.