The holding of 20% or more of the voting power in an investee entity by an investor is a presumptive test that the investee is an associate of the investor.The application of this presumptive test means that:
A) Where an investor acquires a 20% equity stakeholding in an investee the investee is an associate of the investor.
B) Where an investor acquires a 20% equity stakeholding in an investee, in the absence of evidence to the contrary, the investee will be treated as an associate of the investor.
C) An investor must have an equity stakeholding in an investee of at least 20% before the investee can be treated as an associate of the investor.
D) None of the above.

Question

Quizplus · Accepted Answer

The presumptive test of holding 20% or more of the voting power means that, in the absence of evidence to the contrary, the investee will be treated as an associate of the investor. This does not mean that every investment of 20% or more automatically qualifies as an associate, as other factors (such as significant influence or control) may also need to be considered.

The Holding of 20% or More of the Voting Power