Asked by Adeyemi Adeyolanu on May 10, 2024
Verified
An investor presumed to have significant influence owns between 20% and 50% of another company's voting stock.
Significant Influence
The capacity to affect the operating and financial decisions of another entity, typically through ownership of a substantial share of its stock.
Voting Stock
Shares that give the shareholder voting rights in the corporation's matters, typically related to the election of the board of directors.
- Identify the distinctions in accounting practices for investments relative to the extent of influence exerted on the investee.
Verified Answer
AS
ashley serpasMay 14, 2024
Final Answer :
True
Explanation :
According to accounting standards, when an investor owns between 20% and 50% of another company's voting stock, it is presumed that the investor has significant influence over the investee. However, this presumption can be rebutted by evidence that the investor does not have significant influence.
Learning Objectives
- Identify the distinctions in accounting practices for investments relative to the extent of influence exerted on the investee.