Unconsolidated subsidiary definition

What is an Unconsolidated Subsidiary?

A unconsolidated subsidiary is a subsidiary whose financial statements are not included in the consolidated financial statements of its parent entity. Instead, the parent entity only reports its investment in the subsidiary, using the equity method of investment. A subsidiary's financial statements are unconsolidated when the parent does not exercise control over the entity.

Example of an Unconsolidated Subsidiary

Here are several examples of unconsolidated subsidiaries:

  • A joint venture where the parent company shares the ownership of an entity with another party.

  • A business over which the parent company does not exercise control, because it does not have anyone on its board of directors.