What is a partner company?

The most correct or accepted definition of associated company is one that defines it as a company in which another company (called the parent company) owns a stake.

However, the actual definition can vary infinitely depending on the country, the applicable legality or even, as the concept of is used.

A partner company can be owned (in part) by another company or group of companies. As a general rule, the parent company or companies do not usually consolidate the financial statements of the associated company (as it usually happens in the case of a subsidiary).

Difference between subsidiary company and associated company

The main difference between a subsidiary and an associated company lies in the percentage that the parent company owns. If in a subsidiary, the participation is majority, in an associated company the amount it owns will be minority.

As a general rule, the parent company records the value of the associated company in its balance as an asset.


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