Syllabus G. Preparing Simple Consolidated Financial Statements G1. Subsidiaries

G1a. Terms 1 / 11

Syllabus G1a)

Define and describe the following terms in the context of group accounting:

i) Parent
ii) Subsidiary
iii) Control
iv) Consolidated or group financial statements
v) Non-controlling interest
vi) Trade / simple investment

Group accounting

  • Parent

    An entity that has one or more subsidiaries

  • Subsidiary

    An entity, including an unincorporated entity such as a partnership, that is controlled by another entity (known as the parent).

  • Control

    The power to govern the financial and operating policies of an entity so as to obtain benefits from its activities

  • Consolidated or group financial statements

    The financial statements of a group presented as those of a single economic entity.

  • Non-controlling interest

    Non-controlling interest (NCI) arises when the parent entity controls a subsidiary but does not own 100% of it; e.g. if P owns only 70% of the ordinary shares of S, there is a NCI of 30%

  • Trade/simple investment

    An investment in the shares of another entity, that is held for the accretion of wealth, and is not an associate or a subsidiary. Trade investments are shown as investments under non-current assets in the consolidated SFP of the group.