A single company can have multiple businesses. However, they may not be under the same company.
It may decide to have a separate entity for its separate businesses.
It may decide to have a separate entity for its separate businesses.
A Subsidiary company is a separate entity which is owned and promoted by the main (parent) company having it's own business and goodwill but is controlled by the main company.
How to know if a company is a subsidiary?
A company is said to be subsidiary of other if the later company holds controlling interest in the former.
A company is said to be subsidiary of other if the later company holds controlling interest in the former.
Example: A Limited holds 60% of shares in B Limited. Hence B Limited is a subsidiary of A Limited as majority of the share capital is held by A Limited.
All the assets, liabilities, profits and losses of the subsidiary belongs to the parent company to the extent of their holding. Eg: If B Limited makes profit of Rs. 100 then Rs. 60 belongs to A limited and remaining Rs. 40 is called as Minority Interest/Non Controlling Interest.
The accounts of subsidiary companies are consolidated/merged with the parent entity while preparing the financial statements of Parent company. These financial statements are called as Consolidated Financial Statements.
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