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Explain the relationship of lu inc with the investee and

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Problem 1: Explain the relationship of Lu Inc with the investee AND how should Lu Inc. record the investments.

i) Lu Inc. owns 11% of Silver Inc. Both Lu and Silver are involved in residential construction industry. Yang Inc. owns24% of Silver Inc. Many small investors own the remaining shares of Silver Inc. LU (not yang) has given lease residual guarantee to the only major equipment in the books of Silver Inc.

ii) Lu Inc purchased 30% of Commons shares of Tan Inc. The remaining shares of Tan are held by Kwong Inc. The shareholder agreement states that both Lu and Kwong must agree to all major operating and financing decisions made by Tan Inc.

Reference no: EM132619132

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