For the purposes of equity accounting, significant influence is regarded as the power of an investor to:

Question

Quizplus · Accepted Answer

Significant influence refers to the ability of an investor to participate in the financial and operating policy decisions of an investee, without having control over them. This is typically indicated by ownership of between 20% and 50% of the voting shares in the investee. Choice A refers to control, which would require ownership of more than 50% of the voting shares; choice C refers to joint venture interests, which are a separate type of investment; and choice D refers to dominating financing decisions, which is not the same as having significant influence over overall financial and operating policies.

For the Purposes of Equity Accounting, Significant Influence Is Regarded