What is an imaginary association?
imaginary association is a way to combine its different bank accounts to gain combined interest. The advantage of companies with decentralized structures and companies with a number of subsidiaries. The possibility to associate accounts together is not available or legal in all countries. The cash association relies on large multinational banks that are able to facilitate accounts across currencies. Daughter companies can be created by companies that do different work or have been purchased and then integrated into their parents. Without the association of these companies, their accounts would have to be managed separately.
The imaginary association account is created by a bank when the company decides to associate surpluses and deficits in each of its accounts. The accounts maintain their independence on each other, but the bank creates an imaginary position as they have been combined. If the aggregate of all accounts results in excess, the company will receive interest. If the total amount is in arrears, the bank chargesinterest. For example, if a subsidiary and earn 40 percent of the pool interest, it will receive the same amount of money. The same applies to deficiency fees.
Because subsidiaries are often based in different countries with different tax regimes, they will face different fees against what they earn. These fees are charged against profit and usually come in the form of capital revenue tax. The imaginary association allows parent companies to charge fees against every subsidiary to effectively move money from a high tax area to a low tax area. This method allows companies to reduce their tax burden and may explain it some governments do not allow imaginary association.
Matching from an imaginary association agreement is relatively easy. Gives companies flexibility to use cash association to maximize interest generation or to balance losses in one of its dCera's companies with surplus in others. By associating instead of transferring cash, businesses can avoid fees for bank transfer. Partially owned subsidiaries also consider the concept of association pleasant, because it means that they do not have to transfer money to a company they do not control.
Other advantages of imaginary association include the ability of subsidiaries to retain their local autonomy. It also helps to reduce the need for businesses to establish overdraft lines with local banks, as deficits can be negated in other accounts. The combined total amount of all accounts provides one liquidity position. This means that the credit rating of a subsidiary is improved by the total amount of associated cash, but the company still retains full check over cash on its separate account.