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When one company owns more than 50 percent of another company, the company of which it has majority ownership—and over which it therefore has control—is its subsidiary.
Parent Company
A company that owns more than 50 percent of another is called its parent company.
Wholly Owned
Wholly owned subsidiary means the parent company owns 100 percent of the subsidiary's stock.
Accounting Method
Because the company is wholly owned, the parent company must account for the subsidiary using the acquisition method of accounting. This determines how the subsidiary appears on the parent's financial statements. This also means the companies must issue consolidated financial statements.
References
- Investopedia: Wholly Owned Subsidiary Definition
- Investopedia: Subsidiary Definition
- Accounting Info: Business Combinations
- Organisation for Economic Co-Operation and Development. "Glossary of Statistical Terms: Subsidiary." Accessed April 6, 2020.
- Republic of the Philippines. "The Constitution of the Republic of the Philippines, Section 11." Accessed April 6, 2020.
- Philippines Daily Inquirer. "Station 9TV rebrands as CNN Philippines." Accessed April 6, 2020.
- M&M Global. "CNN Teams Up with Nine Media to Launch CNN Philippines." Accessed April 6, 2020.
Writer Bio
Carter McBride started writing in 2007 with CMBA's IP section. He has written for Bureau of National Affairs, Inc and various websites. He received a CALI Award for The Actual Impact of MasterCard's Initial Public Offering in 2008. McBride is an attorney with a Juris Doctor from Case Western Reserve University and a Master of Science in accounting from the University of Connecticut.