What Does Wholly Owned Subsidiary Mean?

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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

About the Author

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.

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