subsidiary

Examples of subsidiary in the following topics:

• Fully Owned Subsidiary

• Reporting for a Combined Entity

  • The ownership of more than 50% of voting stock creates a subsidiary.
  • The financial statements of the parent and subsidiary are consolidated for reporting purposes.
  • The subsidiary can be a company, corporation, or limited liability company.
  • An operating subsidiary is a business term frequently used within the United States's railroad industry.
  • Consolidated financial statements show the parent and the subsidiary as one single entity.

• Cluster Structure

  • An organization has a cluster structure when it is composed of numerous, relatively independent business divisions and subsidiaries.
  • An organization has a cluster structure when it is composed of numerous, relatively independent business divisions and subsidiaries.
  • A business division may include one or many subsidiaries.
  • Subsidiaries are separate, distinct legal entities for the purposes of taxation, regulation, and liability.
  • A good example that can differentiate divisions and subsidiaries would be Google.

• Structure of Corporations

  • In a large organization, various parts of the business may be run by different subsidiaries, and a business division may include one or many subsidiaries.
  • Each subsidiary is a separate legal entity owned by the primary business or by another subsidiary in the hierarchy.
  • However, Compaq (a part of HP since 2002) operates as a subsidiary, using the Compaq brand name.
  • However, the YouTube video service is a subsidiary of Google because it remains operated as YouTube, LLC -- a separate business entity even though it is owned by Google.
  • Hewlett Packard is an example of a corporation with multiple divisions and subsidiaries.

• Joint ventures and direct investment

  • Thus, they will invest in wholly owned subsidiaries.
  • By establishing overseas subsidiaries, a multinational organization can compete more aggressively because it is "in" the marketplace.
  • However, subsidiaries require more investment as the subsidiary is responsible for all marketing activities in a foreign country.
  • The subsidiary strategy requires complete understanding of business conditions, customs, markets, labor, and other foreign market factors.

• Types of Investments: Dependence on Ownership Share

  • Types of investments include: 20% to 50% (as an asset), greater than 50% (as a subsidiary), and less than 20% (as an investment position).
  • The ownership of more than 50% of voting stock creates a subsidiary.
  • A subsidiary company, subsidiary, or daughter company is a company that is completely or partly owned and partly or wholly controlled by another company that owns more than half of the subsidiary's stock.
  • The subsidiary can be a company, corporation, or limited liability company.
  • An operating subsidiary is a business term frequently used within the United States railroad industry.

• Becoming an International Bank

  • The U.S. bank establishes a subsidiary.
  • Subsidiary can accept deposits from both U.S. residents and foreigners but can only grant loans for international business activity.
  • Method 3: A foreign bank enters the U.S. market through a subsidiary U.S. bank.
  • Thus, the foreign bank controls the U.S. bank, converting it into a subsidiary.
  • Many foreign banks use subsidiaries to enter the U.S. banking market because the U.S. has an extremely complex legal system.

• Being Aware of Off-Balance-Sheet Financing

  • An example of off-balance-sheet financing is an unconsolidated subsidiary.
  • A parent company may not be required to consolidate a subsidiary into its financial statements for reporting purposes; however the parent company may be obligated to pay the unconsolidated subsidiaries liabilities.

• Methods of Paying Dividends

  • Stock or scrip dividends are those paid out in the form of additional stock shares of the issuing corporation or another corporation, such as its subsidiary corporation.
  • Property dividends or dividends in specie (Latin for "in kind") are those paid out in the form of assets from the issuing corporation or another corporation, such as a subsidiary corporation.
  • For large companies with subsidiaries, dividends can take the form of shares in a subsidiary company.

• Financial Statement Notes

  • In consolidated financial statements, all subsidiaries are listed as well as the amount of ownership (controlling interest) that the parent company has in the subsidiaries.