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I have been using Lydia and have noticed the following: If I put on a ring, armor, boots, necklace and head piece all with bow damage percentage increase, my bow damage rating in my own inventory screen goes up to about 140 for an ebony bow. If i then give this bow to Lydia, the damage on the bow is the 140. If I give her the bow to start then give her the clothing with bow damage percentage increases, the bow damage remains at the base level in her inventory screen. Same thing if I give her the bow with bonus damage to start then give her the clothing. The bow damage always remains the same as what it was when I gave it to do enchantments on armor and such actually provide a benefit or bonus to your companion? Perhaps it is just not visible? Thanks!

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Enchanted gear does work on companions, but they don't take enchantments into account when choosing the items to equip. What you're seeing is the stats adjusted for your character, because the companion's inventory acts like a container.

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Thanks @kotekzot. To clarify a little further though, is there a glitch in the game that makes it so that the new damage on the bow that Lydia is holding, once she has equipped the bow damage enchanted items, does not actually reflect on the item in her inventory. Because when I give her the bow with base damage, then give her the apparel with a bow enchantment the bow's damage itself never changes even though she is wearing the items. To note, I am playing on PS3. – Mark Ripek Feb 25 '12 at 22:49
@MarkRipek, have you somehow measured Lydia's exact damage or are you judging it by the numbers displayed in her item transfer menu? Because in the transfer menu you're seeing your damage with the bow, not hers. – kotekzot Feb 26 '12 at 2:54

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