When an investor reporting under IFRS owns more than 20% of the common shares of a corporation, it is generally presumed that the investor
A)has insignificant influence on the investee and that the cost method should be used to account for the investment.
B)should use the fair value through profit or loss model to account for the investment.
C)will prepare consolidated financial statements.
D)has significant influence on the investee and that the equity method should be used to account for the investment.

Question

Quizplus · Accepted Answer

When an investor owns more than 20% of the common shares of a corporation, it is generally presumed under IFRS that the investor has significant influence over the investee, and thus, the equity method of accounting should be used for the investment.

When an Investor Reporting Under IFRS Owns More Than 20