Definition · ownership structure
Parent-subsidiary
Parent-subsidiary is the relationship in which one company controls another through majority ownership, triggering consolidation. For parent-subsidiary, the important details are the accounting period, source evidence, reviewer, materiality threshold, and control purpose that make the treatment auditable during close, reporting, and later review.
Also known as parent company and subsidiary, parent-subsidiary relationship, parent and subsidiary
Why it matters
Understanding parent-subsidiary matters because close, reconciliation, and audit work depend on consistent timing, source evidence, review thresholds, and ownership. A loose definition creates avoidable rework. Pluvo maps parent-subsidiary relationships and ownership percentages, so consolidation scope, NCI, and intercompany eliminations follow the real structure.
In practice
Close example
Teams use parent-subsidiary during close, review, or audit support when a balance or transaction needs evidence. The controller should be able to trace the number to source records, timing, reviewer, and control threshold.
Pluvo example
Pluvo maps parent-subsidiary relationships and ownership percentages, so consolidation scope, NCI, and intercompany eliminations follow the real structure.
In practice, teams should define parent-subsidiary with a clear source, owner, time period, and decision before they use it in reporting, planning, or operating reviews.
Understanding parent-subsidiary matters because close, reconciliation, and audit work depend on consistent timing, source evidence, review thresholds, and ownership. A loose definition creates avoidable rework. Pluvo maps parent-subsidiary relationships and ownership percentages, so consolidation scope, NCI, and intercompany eliminations follow the real structure.
A strong workflow for parent-subsidiary separates the definition from the action: first agree what the term means, then decide how it is measured, when it changes, and who is accountable for the next step.
Pluvo maps parent-subsidiary relationships and ownership percentages, so consolidation scope, NCI, and intercompany eliminations follow the real structure.
FAQ
What is a parent-subsidiary relationship?
Parent-subsidiary is the relationship in which one company controls another through majority ownership, triggering consolidation. For parent-subsidiary, the important details are the accounting period, source evidence, reviewer, materiality threshold, and control purpose that make the treatment auditable during close, reporting, and later review.
When does a parent company consolidate a subsidiary?
Use parent-subsidiary when the decision depends on the relationship in which one company controls another through majority ownership, triggering consolidation. Before relying on it, confirm the source system, accounting treatment, time period, and owner so the term is applied consistently.