Profit Margin with Significant control and/or influence

CFA Level II
#1

In 2010, Company A’s net profit margin would be highest if:

  1. it is deemed to have control of Company B.
  2. it had not increased its stake in Company B.
  3. it is deemed to have significant influence over Company B.

If company has significant control (more than 50% stake) then the net income will increase by the % of control of other company. Now significant influence is (<=49%). Hence the net income will be lower. Assuming no impact on revenue. I chose A but the answer is C.

Does having control or influence impact revenue reporting as well?

#2

Net income is the same under the equity method, partial consolidation, and full consolidation.

Sales (assuming that the subsidiary’s sales are positive) will be highest under full consolidation, and lowest under the equity method, with partial consolidation in the middle.