Control

Brief Definition

Control refers to the power and authority to direct the activities, policies, and management decisions of an entity, typically a subsidiary or another business, through ownership of voting shares, contractual agreements, or other means

Further Explanation

In a business and financial context, control refers to the power and authority to direct the activities, policies, and management decisions of an entity, typically a subsidiary or another business, through ownership of voting shares, contractual agreements, or other means. Control is a crucial concept in determining how a company consolidates its financial statements and reports its financial performance and position.

Example:
Company A owns 60% of the voting shares of Company B. This majority ownership allows Company A to control Company B by appointing the majority of its board of directors and influencing its strategic decisions. Therefore, Company A consolidates Company B’s financial statements with its own.