A subsidiary is an entity that is controlled by another entity (parent). IAS 27 states when parent owns more than 50% of voting power of an entity, then control exist and full consolidation is required. But in following situations control exist even if owns <=50%:

-          parent has power of >50% voting right by agreement with other investors;

-          parent has power to govern financial and operating policies of the entity;

-          parent has power to appoint or remove a majority of members of BOD

-          parent has power to cast a majority of votes at meeting of BOD

For a subsidiary, the treatment in group accounts will be full consolidation.

An associate is an entity in which the investor has significant influence and which is neither a subsidiary nor a JV of investor. IAS 28 states if an investor holds >=20% voting power of an entity, then significant influence exist and equity method requires. But in following situations significant influence exist even if owns <20%:

-  representation on BOD

-  participation in the policy making process

-  material transactions between investor and investee

-  interchange of management personnel

-  provision of essential technical information