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Gold/Mining/Energy : Nuvo Research Inc
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To: toccodolce who wrote (7793)10/7/2001 7:10:03 PM
From: PlayTheKing  Read Replies (1) of 14101
 
Thomas:

Under current Canadian GAAP rules 20% ownership is a "grey area" that allows companies to either record the investment in one of 2 ways:

1) Cost
2) Proportionate consolidation

The deciding factor as to which two methods is selected depends on whether DMX exercises significant influence over Oxo.

If it does, then option 2 has to be followed which means that DMX would record its "proportionate share" of Oxo revenues, expenses, assets etc. Any income (loss) would increase (decrease) DMX's reported investment in Oxo.

If it doesn't exercise significant influence then DMX would record the investment at cost with the only income coming by way of interest/dividends.

All of this will now be irrelevant as DMX has proposed to acquire 100% of Oxo giving it "control" over Oxo. When this is approved, Canadian GAAP requires that DMX consolidate the operations of Oxo into DMX's financial results.

Hope that helps.

PlayTheKing
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