Mastering Financial Accounting pp 287-291 | Cite as
Investment Accounts
Chapter
Abstract
A company may purchase shares and debentures of other companies or government stocks. The reason may be:
- (a)
In order to generate income, e.g. a holding of ordinary shares which is below 20 per cent of the total ordinary shares, or any purchase of preference shares, debenture stock or government stock. Such an investment may be in conjunction with a sinking fund.
- (b)
In order to participate in or control another company’s trading operations, e.g. a holding of ordinary shares totalling 20 per cent or more or the investee company’s total ordinary shares. A holding of 20–50 per cent is generally called an ‘associate company’, and a holding in excess of 50 per cent is generally called a ‘subsidiary’.
Keywords
Average Cost Financial Account Preference Share Sale Proceeds Investment Account
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
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Copyright information
© Andy Simmonds 1986