In: Accounting
Tiger Corporation owns 45% of Rabbit Ltd.
Tiger Corporation also
owns 15% of Beaver Ltd.
Explain, if the ownerships of Tiger Corporation in Rabbit Ltd and Beaver Ltd are sufficient to conclude on how the investments should be reported by Tiger Corporation
Equity methods to be recorded either as per
But only % holding cannot decide the method to be followed to report the investment it is also required to consider whether the investor is able to apply significant influence through its holdings over another corporation.
There are various cases where influence can exist even if ownership is less than 20% -
Cases where ownership is 20%-50% but no significant influence -
So, we can conclude that just ownership % cannot decide how the investments should be reported.
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