Subsidiary
Definition
A company that is controlled by another company, its parent.
Why does it matter in a group?
A subsidiary is consolidated in full, not in proportion to the group’s ownership, as long as the parent has controlControlPower over a company, exposure to its variable returns, and the ability to use that power to affect those returns. Control makes the company a subsidiary and brings it into the consolidation.Open the glossary entry. Its assets, liabilities, income and expenses are all added. The outside owners’ share is then shown as non-controlling interestNon-controlling interestThe share of a subsidiary's equity and profit that belongs to owners outside the group.Open the glossary entry. A subsidiary can itself be a parentParentA company that controls one or more other companies.Open the glossary entry of other companies lower in the group. Control is reassessed when the facts change, so a company can become a subsidiary, or stop being one, without the shareholding changing. Its figures should cover the same period as the rest of the group and follow the same accounting policies.
A small example
Zenvara owns 80 percent of Kestrelwick. Kestrelwick earns a profit of SGD 50,000. The group includes all of it. SGD 10,000 (20 percent) is attributed to the non-controlling interest and SGD 40,000 to the owners of the parent.