The U.S. corporation Fun Toys, Inc. sets up a firm in China. The parent company remains in the United States and retains complet

Question

3 years ago

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The U.S. corporation Fun Toys, Inc. sets up a firm in China. The parent company remains in the United States and retains complet

e 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

Business

1 answer:

rosijanka [135] · Answer 1 · 2022-07-08T16:52:35+03:00

Answer:

(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.