Subsidiary or Associate? Tom Clendon the online ACCA SBR lecturer explains the difference!
Company A owns 40% of the shares in B. No other shareholder in B owns more than 2%. B has five directors of which A has appointed three.
Let’s use this example to see how we apply our knowledge of the definitions of a subsidiary and an associate in a practical situation.
Пікірлер: 7
Thank you very Tom. I wasn't wrong at last. Great video, clear explanations and good insights. I love it
@tomclendonaccasbronlinelec7226
2 жыл бұрын
Glad you enjoyed it
In some cases the company it doesn't have any share presents% but in fact have a control by management just, the point control is power!
@tomclendonaccasbronlinelec7226
Жыл бұрын
If there is just POWER but no EXPOSURE to economic benefits, then I would not regard this as a subsidiary. IFRS 1O
@tomclendonaccasbronlinelec7226
Жыл бұрын
and this very point came up in the March 23 exam!
But what if we hold only 20% along with 3 out of 5 representations on the board .. will that mean that we have PEA ?
@tomclendonaccasbronlinelec7226
2 жыл бұрын
It becomes more subjective the smaller the holding as there is less exposure to variable returns and the increase risk in the other shareholders in B ganging up on A. So it would be good to know more information. The key takeaway is to move away from a fixation on numbers / % being the only factor in deciding whether there is control (sub) or significant influence (associate).