If an investor owns less than 20% of the ordinary shares of another corporation as a long-term investment,

Question

Quizplus · Accepted Answer

If an investor owns less than 20% of the ordinary shares of another corporation as a long-term investment, it is presumed that the investor has relatively little influence on the investee. Therefore, the equity method of accounting for the investment should not be employed, and no dividends can be expected as the investor does not have significant influence on the investee.

If an Investor Owns Less Than 20% of the Ordinary