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Associate or Subsidiary

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Associate or Subsidiary

  • This topic has 5 replies, 2 voices, and was last updated 3 years ago by John Moffat.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • December 29, 2021 at 1:35 pm #645011
    aadil1234
    Member
    • Topics: 75
    • Replies: 104
    • ☆☆

    Sir if Company A owns 35% stake in Company B and remaining investors hold less than 10% stake individually in Company B. Will company B be a subsidiary or an associate of company A. Please explain?

    December 29, 2021 at 3:28 pm #645016
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54684
    • ☆☆☆☆☆

    It will be an associate.

    Given that A owns less than 50% of the shares it would only be classed as a subsidiary if they were able to control and govern the company, which is not the case here.

    The conditions for both subsidiary and associate are stated in Chapter 25 of our free lecture notes and the lectures working through the chapter.

    December 29, 2021 at 4:05 pm #645017
    aadil1234
    Member
    • Topics: 75
    • Replies: 104
    • ☆☆

    Sir if Company A owns 25% in Company B and Company C owns 75% in Company B than will Company B still be an associate for Company A?

    December 30, 2021 at 7:50 am #645033
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54684
    • ☆☆☆☆☆

    Yes it will.

    December 30, 2021 at 7:53 am #645035
    aadil1234
    Member
    • Topics: 75
    • Replies: 104
    • ☆☆

    Ok sir thank you for the clarification.

    December 30, 2021 at 8:16 am #645044
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54684
    • ☆☆☆☆☆

    You are welcome.

  • Author
    Posts
Viewing 6 posts - 1 through 6 (of 6 total)
  • The topic ‘Associate or Subsidiary’ is closed to new replies.

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