Skip to main content

Holding company

The company that acquires the equity shares of any other company is known as holding company and the company whose shares have been acquired is known as subsidiary company. The main purpose of the holding company is to gain control over the company. Such holding company is known as parent company. In another words if a company holds more than 50% of the total capital of another company that is known as holding company. In this arrangement no need to be liquidated for both holding and subsidiary company.
      After establishing holding company, both company have to prepare final accounts separately became the legal existence of both companies remains separate. On the basis of those both balance sheets the holding company can collect the different information about the financial position of the company and the balance sheets of both companies are to be combined. In another words a consolidated balance sheet will be prepared for both company by holding company.

Comments

Post a Comment

Popular posts from this blog

Wealth maximization

Wealth maximization means the goal of the firm should be to maximize the market value of its equity shares which represents the value of the firm to its equity shareholders. Wealth maximization means maximizing the net present value of a course of action. That financial action which has a positive net present value creates wealth and therefore is desirable. It is consistent with the objective of maximizing owner's economic welfare. It implies the fundamental objective of a firm should be to maximize the market value to its shares. In corporation, a management team is elected to manage its activities. Management is supposed to operate in  the best interests of the shareholders. Some have argued that the managers could work just enough to keep stockholders' at a "fair" or "reasonable" level and then devote the remainder of their efforts and resources to public service activities, to employee benefits of higher executive salaries. Similarly, the stockholders ge
3 comments
Read more

Capital Budgeting

In simple words, capital budgeting is the process of making investment decision in capital expenditure. A capital expenditure may be defined as an expenditure, the benefits of which are expected to be received over a period of time exceeding one year. So in simple language, we can say that a capital expenditure is an expenditure incurred for acquiring or improving the fixed assets, the benefits of which are expected to be received over a number of years in future.       Therefore, the capital budgeting decision involves a current outlay or series of outlay of cash resources in return for an anticipated flow of future benefits. In other words the system of capital budgeting is employed to evaluated expenditure decision which involve current outlay but are likely to produce benefits over a period of time longer than one year.     1. Pay back period : The pay back period is one of the most popular and widely recognized traditional methods of computing investment projects. The payback i
Post a Comment
Read more

Character Accountant in present contents

Character Accountant is an auditor of accounting record of business enterprises. It is also called supervisor of account keeper. Charterer Accountants are a person who are qualified by government authority who create a seprate board called chartered accountant association. Chartered Accountants only can be a member in this association and they can certified a new chartered accountant by taking different stage of examination.        Now a days Chartered Accountants are so popular because in present contents many business organization are formed broadly and they can deal big business and that kind of business are run in globally so that kind of accounting transaction cannot handle by general auditor and they don't have any authority to do so. In present situation the world is narrow because of wide communication facilities, now a days we can easily communicate in different location so it is also apply in business so many business deal are done through internet and e-mail and bye hel
Post a Comment
Read more