For the purposes of equity accounting, it is presumed that the investor has significant influence over the other entity where the investor holds:
A) 100% of the voting power of the investee.
B) between 5% and 10% of the voting power of the investee.
C) 20% or more of the voting power of the investee.
D) 75% or more of the voting power of the investee.

Question

Quizplus · Accepted Answer

According to International Accounting Standards (IAS) 28, equity accounting is applied when the investor has significant influence over the investee. Significant influence is presumed to exist when the investor holds 20% or more of the voting power of the investee. Therefore, choice C is the correct answer.

For the Purposes of Equity Accounting, It Is Presumed That