When an investor owns less than a majority of the voting stock of another corporation, the accountant must judge when the investor can exert significant influence.For the sake of uniformity, U.S.GAAP and IFRS presume that significant influence exists at ownership of _____ or more of the voting stock of the investee. (Assume that management does not have a contractual or other basis to demonstrate that influence.)

Question

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Under both U.S. GAAP and IFRS, an ownership interest of 20 percent or more of the voting stock of another corporation is presumed to indicate that the investor has the ability to exert significant influence over the investee.

When an Investor Owns Less Than a Majority of the Voting