An investor who owns 15% of an entity's voting shares can

Question

Quizplus · Accepted Answer

An investor who owns 15% of an entity's voting shares can potentially have influence over the investee if the shares are widely held. The extent of influence depends on factors such as the percentage of shares held by other investors, the level of attendance and participation in shareholder meetings, and the degree of agreement among shareholders. Therefore, it is important to assess the level of influence before determining the accounting method to be used (such as equity method or cost method). Option A is incorrect because it is possible for an investor with 15% voting rights to have significant influence over the investee. Option C is incorrect because the choice of accounting method should not be based solely on the percentage of ownership.

An Investor Who Owns 15% of an Entity's Voting Shares