Subsidiary
A subsidiary is an entity controlled by another entity, the parent. Combine the parent's and subsidiary's assets, liabilities, income and expenses according to the consolidation requirements and eliminate intragroup balances and transactions. The share owned by others is shown as non-controlling interest. The subsidiary remains a separate legal entity. A parent may control an entity through substantive rights even without majority share ownership.
Worked example
A parent holding 80% of ordinary voting rights will normally control a subsidiary.
Common mistake
Control can exist without a simple majority and depends on power, variable returns and their link.
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 |