Unless there is evidence to the contrary, an investor owning at least 20% of the shares of an investee is assumed to have significant influence.

Question

Quizplus · Accepted Answer

According to accounting standards, such as the International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP) in the United States, an investor owning 20% or more of the voting shares of an investee is presumed to have significant influence over the investee, unless it can be clearly demonstrated otherwise. This assumption affects how the investment is accounted for in the investor's financial statements, typically using the equity method of accounting.

Unless There Is Evidence to the Contrary, an Investor Owning