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Hi, this is not exam related, but I have heard a few terms that I don’t fully understand,
Parent company and owner – If a company is listed as the owner of another company, would this be the same as a company buying 100% of shares, with no non-controlling interest?
How would a parent company be different?
When a company purchases e.g. 70% of another company, what would we call each of the companies in that relationship?Thanks,
These terms are commonly examined in Paper FA.
A parent company is a company that controls the other company. This generally means that they own more than 50% of the other company and this other company is called the subsidiary.
Any company may be the owner of any number of shares in another company, but is only called the parent company if they own more than 50%.
All of this is explained in my free lectures on group accounts.
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