ASSOCIATE COMPANY Meaning and
Definition
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An associate company can be defined as a business entity in which another company holds a significant amount of ownership stake, typically ranging from 20% to 50% of the voting rights. It refers to a legal and financial connection between two entities where one company maintains a certain level of influence or control over the other entity's operations and decisions.
From a legal perspective, an associate company is classified as a separate legal entity, distinct from its parent company. However, due to the substantial ownership interest, the parent company is able to exert influence over the associate company's strategic and operating decisions.
In terms of financial reporting, an associate company is accounted for using the equity method. This method entails recognizing the initial investment as an asset and periodically adjusting its value based on changes in the associate company's net income or losses. The parent company reports its share of the associate company's profits or losses as a separate line item on its financial statements.
Although there is a significant level of control or influence, the parent company does not possess full ownership or complete control over the associate company. This distinguishes it from a subsidiary, where majority ownership is present.
Overall, an associate company represents a business relationship where one company maintains a notable degree of involvement and financial interest in another company without having full ownership or control.
Common Misspellings for ASSOCIATE COMPANY
- zssociate company
- sssociate company
- wssociate company
- qssociate company
- aasociate company
- azsociate company
- axsociate company
- adsociate company
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- aszociate company
- asxociate company
- asdociate company
- aseociate company
- aswociate company
- assiciate company
- asskciate company
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- asspciate company
Etymology of ASSOCIATE COMPANY
The term "associate company" is not derived from a specific historical etymology. Instead, it is a combination of two commonly used English words that have individual origins.
The word "associate" is derived from the Latin word "associatus", which means "to unite" or "to join". It entered English usage around the 15th century and referred to a person or organization that is closely connected or affiliated with another.
The word "company" has a different origin. It comes from the Old French word "compaignie", which meant "companion" or "society". It traces back to the Latin word "companionem", which translates to "one who eats bread with someone else", indicating a shared meal or mutual association.
When these two words are combined to create the term "associate company", it refers to a business entity that is related to or connected with another company through shared ownership, control, or financial interest.
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