When a company invests in equity securities with 20% to 50% ownership in the investee's voting stock,the investor can significantly influence the investee's decisions.

Question

Quizplus · Accepted Answer

When an investor owns 20% to 50% of the voting stock of an investee, they have a significant level of control and influence over the investee's decisions. This level of ownership is typically referred to as "significant influence" and is often substantial enough to impact the strategic direction of the investee. Under accounting standards, such an investment is typically accounted for using the equity method, which requires the investor to record their share of the investee's profits and losses in their financial statements.

When a Company Invests in Equity Securities with 20% to 50