Question:

What is the difference between an inter-company and a subsidiary? Or how do they relate?

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I'm trying to determine the proper lingo I should use for describing the preparation of month end close for the parent company and its intercompany/subsidiary accounts?

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  1. It sounds like you are involved in consolidation month end close.  If an organization is made up of several legal entities, and let's assume for simplicity we are talking about wholly owned companies (i.e. the stock issued is wholly owned by the parent company), and since each legal entity should have its own financials, at month end, there may be intercompany accounts between the parent company and the subsidiaries and intercompany accounts between the subsidiaries.  You are preparing financials for consolidated group on a GAAP basis (assumes US accounting rules) either on an accrual or cash basis.  

    Intercompany means transactions that occur between related parties (parent/subsidiary or subsidiary to subsidiary).  A subsidiary generally describes ownership structure for a legal entity (company).  There's a parent (company that is traded publicly) and the subsidiary (company that is owned by the parent).


  2. intercompany is a partner company, that two companies work together.

    subsidiary is a country that works under another management.

    Like futureshop is a subsidiary of best buy.

    but do you something like an intracompany? an inside company.

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