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Microcap & Penny Stocks : ADOT - BIOMODA: Profitable Technology with Purpose
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To: BIGFRED who wrote (1170)6/26/1998 9:29:00 AM
From: LFISKY   of 4650
 
Big Fred,
I am a little bit rusty on my accounting rules because I haven't done much public accounting lately, but I think this will help. Because ADOT currently owns between 20% and 50% of Biomoda, the key issue on whether they should treat their investment under the cost or equity method lies in their ability to exert significant influence over the control of Biomoda. (i.e. representation on board, participation in policy making, intercompany balances, technological dependency, etc.) Recently the profession has concluded that anything over 20%, without evidence to contrary would be enough to exert influence and therefore use the equity method. What this means is that ADOT would recognize their percentage of Biomoda's earnings. If not, they would use the cost method and only report any dividends that Biomoda would pay out.

Hope this helps,
LFISKY
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