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P2-D2.
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meogianac
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Hi Sir,
I know that according to the equity method, the dividend paid out would reduce the value of investment in associates. But I can not understand the logic behind this. Could you make it clear?
P2-D2
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Hi,
The dividend is a distribution of the net assets of the associate to its shareholders. If you are distributing some of the net assets as a dividend then there will be a reduced amount of net assets following the distribution.
I hope that clears it up for you.
Thanks
meogianac
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