Parent
A parent is an entity that controls another entity, its subsidiary. For a simple consolidation question, start by identifying the investor's voting rights and the activities that significantly affect returns. Then assess whether it controls those activities and benefits from variable returns. Consolidation combines the parent and subsidiary as a single economic group.
Worked example
An investor with a majority of relevant voting rights normally controls the investee.
Common mistake
Control involves power, exposure to variable returns and ability to use power to affect returns; ownership above 50% is not the sole possible route.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | FR | Direct | Official assessment-window verification pending |
| ACCA | K1 | Direct | July 2027–August 2028 |
| ACCA | SBR | Direct | Official assessment-window verification pending |
| CIMA | F2 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |
Related terms
Also called: Parent company