Question: ABC Co. has a foreign operation, XYZ Co., located in Australia. XYZ Co. sells goods to the local market and in the past had financed

ABC Co. has a foreign operation, XYZ Co., located in Australia. XYZ Co. sells goods to the local market and in the past had financed its own operations through operating income and local borrowing. In fiscal 2013, ABC Co. decided that, in order for XYZ Co. to maximize its profitability, ABC Co. management would become actively engaged in the operations, and all financing would be sourced through ABC Co.
Required
Which approach should ABC Co. use to report XYZ’s results for fiscal 2013?

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