what is an unconsolidated subsidiary 
an unconsolidated subsidiary is a company that is owned by a parent company but whose individual financial statements are not included in the consolidated or combined financial statements of the parent company to which it belongs instead an unconsolidated subsidiary appears in the consolidated financial statements of the parent as an investment this usually applies when the parent company does not have a controlling stake in the subsidiary understanding an unconsolidated subsidiarya company may be treated as an unconsolidated subsidiary when the parent company is not in control of a subsidiary has temporary control of the subsidiary or if the parent company s business operations are considerably different than that of the subsidiary different accounting treatments apply depending on the percentage owned by the parent company the ownership stake however is always less than 50 if the ownership stake is 20 or more but less than 50 the parent typically can exert some type of control over the subsidiary here the parent will use the equity method of accounting as the unconsolidated subsidiary is treated as an investment with more than 20 ownership in the voting stock of the subsidiary this is known as an influential investment under this method the parent must record any profit or losses realized from the subsidiary on its income statement parent companies with less than a 20 stake and no control of the subsidiary merely record the investment at historical cost or the purchase price on its balance sheet this is known as a passive investment however if dividends are paid which are cash payments to shareholders the parent records the dividend income but does not record any investment income earned from the subsidiary reasons to have an unconsolidated subsidiarymost often a parent company will create the unconsolidated subsidiary itself there are a variety of reasons it may do so including creating joint ventures jvs to split costs with another company or special purpose vehicles spvs to segregate revenues costs and profits for special projects from that of the parent company 