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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.

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