What Do Potential Voting Rights Refer To, and How Do

question 14

Essay

What do potential voting rights refer to, and how do they affect the application of the equity method for investments under IFRS? Under U.S.GAAP? What is the term generally used for equity method investments under IFRS?

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Definitions:

Liable

Subject to being held accountable, usually in a legal or financial context, for fulfilling obligations or compensating for an incurred loss or damage.

Constructive Trust

A legal concept created by a court to rectify a situation where someone has wrongfully gained property at another's expense.

Agency Relationship

An agency relationship occurs when one party, the agent, is authorized to act on behalf of another party, the principal, in dealings with third parties.

Breaches

Instances of violation or non-compliance with laws, regulations, contracts, or standards.