Subsidiary and Parent Organisation

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Questions related to patient culture and beliefs, company and its subsidiary account deals and relationship between subsidiary and parent organisation

Question 1

Allowing the patient to incorporate their culture and religion into their care would seem beneficial to the overall recovery of the patient. How does it work if the culture and religion conflict with the care the hospital is trying to give?

The treatment of a patient is not only the treatment of physical problems that they are dealing with. It is the complete treatment of his or her health which includes physical as well as the mental condition of the patient. The mental part is a very important part of treatment because without will power, it is very difficult to treat any disease. The multitude of hospitals present around us have their own philosophy to guide patients to better health and often these work with people who are ready to accept this way and sometimes vice versa. People believe in the healing processes mentioned in their culture and religion and often find themselves at crossroads when faced with newer technologies or processes in medicines (Winnicott, (2018). In this case, the doctor should make the patient calm and somehow make them trust the process. It can be done by enlightening them with detailed explanations on how they would deal with the patient’s problem.

Question 2

(DaNy) Since Duke Corporation sold a portion of the stock to an outside party,the company could lose their controlling share of Salem Company. In this caseDuke will adjust their books of accounts for investment value in order to establishexact gains on this transaction and define the correct value of assets and liabilitiesin the books of accounts. Then they will account for the loss or gain of the sellingof the stock to an outside party in their books of accounts. If Duke Corporationstill maintains control over Salem Company, they will not recognize the gain orloss from the sale of the stock, and any amount above their invested value will berecognized as additional paid in capital from Duke and will increase thecompany’s investment in the Salem Company. Duke will have to adjust thisinvestment in their books of account prior to the actual transaction to ensure that itgenerates the additional paid in capital accurately.

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Duke Corporation holds a significant control over its subsidiary, Salem Corporation. To balance its books, Duke Corporation will sell a part of its share in Salem corporation. By doing this, it can adjust its accounting books thus creating a clearer picture of its transaction against its subsidiary. The losses and gains of this particular transaction will be realised and depending on the results, the parent company will adjust the accounts. If the parent company still continue to exercise control over its subsidiary then the gain or loss from gained will not be realised and it will go down as extra capital paid by the parent company for its associate company and it will only add to the investment on its subsidiary (Means,2017). To ensure the correct numbers it needs to adjust its accounts before the transaction of its subsidiary to some other third company. It needs to be done so that the additional capital can be observed correctly. There are various ways in which the accounts can be calculated depending on the amount of control it holds over its subsidiary.

Question 3

(Rodner) Before answering the fundamental questions of this forum, we need to beclear regarding the relationship between a subsidiary and its parent. Given thedefinition of a subsidiary which is a company owned and controlled by anothercompany, we can say that the subsidiary is the investee (the controlled company andthe parent company is the investor (the owning company). But we have to precisethat a parent does not only own a subsidiary it also runs it and has operations of itsown. Now we can understand that Duke Corporation owns and runs SalemCompany. As it is stated in the forum outline, the control that Duke Corporation hasover Salem Corporation is due to the fact that it acquired a significant portion of thesubsidiary shares at a given time. But when we know that subsidiaries share isnegotiable, it is easy to understand that the parent company can decide to sell itsSalem detained shares at any given time.

The relationship between the parent company and the subsidiary is that the parent company is the investor and the subsidiary is the investee. So, in the case of Duke corporation which sold a portion of its share in Salem Corporation, it is left with only three options on how to deal with its subsidiary. The first option says that Duke Corporation doesn’t give up Salem Corporation and so the balancing of the books is done following the consolidation method of accounting. It is nothing but an accounting method where the revenue of both the parent and the subsidiary is combined. The second option says that the parent company only has a moderate share(20-50) of the subsidiary and thus it follows the equity accounting method where the total revenue gained from this subsidiary adds to the investment by the parent company and vice versa (Contractor, Yang & Gaur, 2016). The third option says that the parent company loses the influence over its subsidiary and in this case, duke corporation will follow fair value accounting method. It is the process where the company looks at current market rates to rate their associate companies and investments. A deal can be settled with another third company where the control will be given to them at some terms and conditions.

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