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Difference between an investment been recognised as an associate and a subsidiary in terms of consolidated...

Difference between an investment been recognised as an associate and a subsidiary in terms of consolidated financial statements

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Answer #1

In terms of consolidated financial statements the fundamental difference between an investment treated as subsidiary and associate is the method of consolidation.

With respect to subsidiary, the subsidiary and holding are treated as same entity and so all the assets and liabilities of subsidiary are treated as that of parent company.

With respect to associate, the associate is not treated as same entity and only the profit made by the associate is added to the value of investment in books of parent company.

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