Consolidating subsidiaries

In some cases it is a government or state-owned enterprise.In some cases, particularly in the music and book publishing industries, subsidiaries are referred to as imprints.For instance, a multinational enterprise may experience political risk in another region.From an accounting sense, it might not make sense to account for the subsidiary beyond an investment on a parent’s financial statements, but the exposure does extend to the parent’s core business. has a 40% controlling interest in its unconsolidated subsidiary Instagram.

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Power is the existing rights that give the current ability to direct the relevant activities.An unconsolidated subsidiary is a company that is owned by a parent company, but whose individual financial statements are not included in the consolidated or combined financial statements of the parent company to which it belongs.Instead, an unconsolidated subsidiary appears in the consolidated financial statements of the parent as an investment.A company may be treated as an unconsolidated subsidiary when the parent company is not in control of a subsidiary, has temporary control of the subsidiary, or if the parent company's business operations are considerably different than that of the subsidiary.Different accounting treatments apply, depending on the percentage owned by the parent company.

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