Need a long and detailed self explanatory solution for the following questionWhat are the relative advantages and disadvantages of settings up a wholly owned subsidiary instead of a joint venture?

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Need a long and detailed self explanatory solution for the following question

What are the relative advantages and disadvantages of settings up a wholly owned subsidiary instead of a joint venture?

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Introduction

Subsidiary companies are the companies owned and controlled by the parent companies. Parent companies own subsidiary companies by acquisition of more than 50% shares or having control over composition of board of subsidiary. Subsidiary companies can also be formed by the parent companies by segregating assets and operations and issuing shares of the subsidiary company to the existing shareholders of the company.

Joint venture is an entity formed due to contract between two or more companies to undertake a collective project or operation.

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