PCo Owns 60% of ACo and 20% of BCo and 10

question 37

Essay

PCo owns 60% of ACo and 20% of BCo and 10% of DCo.ACo owns 45% of DCo.Identify the basis that each company is required to use when reporting its equity investments (if any).

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Definitions:

Reinvestment

The process of using dividends, interest, or any form of return earnings to purchase additional shares or units instead of receiving the earnings in cash.

Compound Interest

This refers to the interest that is calculated on both the original principal amount and on the interest that has previously been added to that principal in past periods.

Initial Principal

The original sum of money borrowed in a loan or invested, before any interest or profit is added.

Reinvested

The act of using dividends, interest, or any form of returns to purchase additional shares or assets rather than taking cash.