Anthony @ Equity Investigations, Dear Anthony, Message Board

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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony,

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To: coachbobknight who wrote (13152)	2/21/1999 5:42:00 PM
From: john harris	Read Replies (1) of 122087

<<still to me it smells like PONZI...i don't believe cyoe should be able to book sales to companies that it has a greater than 25% ownership stake in...buying from oneself...>> You're on the right track, Coach. But according to GAAP accounting a corporation does not have to back out intercompany sales under the "equity method" (ie, ownership of 20% to 50% levels). Only in the "full consolidation method" of accounting (ie, greater than 50% ownership) must intercompany sales be reversed out on the Income Statement. Often emerging companies will keep ownership to the 50% or below levels just so they can prop up the sales line on the Income Statement by dumping product on their subsy. Hope this helps. john (mostly a lurker. I read faster than I type)

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