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3. Can a firm own other firms and if so why would they do so? Does...

3. Can a firm own other firms and if so why would they do so? Does Federal Government get involved in this action and if so why would they add to the complexity of the action?

4. If by chance a firm does own other income producing assets how are they reflected in their financial status.

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Answer #1

A Firm owning another Firm can be in the form of parent and subsidiary relationship. A Company can own another Company. A subsidiary company is a company owned and controlled by another company. A firm can own another firm for Eliminating the competition, Effective utilization of the resources , Market expansion, Reducing the cost of production and increasing the profits. Yes Federal government imposes restrictions on a Firm owning another Firm and a Firm has to abide by the restrictions imposed which can make the action complex.

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