What is the dominant factor used to distinguish non-strategic investments from significant influence investments?

Question

Quizplus · Accepted Answer

The dominant factor used to distinguish non-strategic investments from significant influence investments is the investor's intention to establish or maintain a long-term operating relationship with the investee. This intention is typically demonstrated by the existence of a significant degree of intercompany transactions, joint ventures, or other operational agreements between the investor and the investee, indicating a level of involvement and influence beyond that typically associated with ordinary investments. The use of either the cost method or the equity method to account for and report the investment, as well as the percentage of equity held by the investor, are secondary factors that may be used to support the determination of whether an investment is strategic or merely passive, but they are not the dominant determinant.

What Is the Dominant Factor Used to Distinguish Non-Strategic Investments