When an Investor Reporting Under IFRS Owns More Than 20

question 60

Multiple Choice

When an investor reporting under IFRS owns more than 20% of the common shares of a corporation, it is generally presumed that the investor

• A)has insignificant influence on the investee and that the cost method should be used to account for the investment.
• B)should use the fair value model to account for the investment.
• C)will prepare consolidated financial statements.
• D)has significant influence on the investee and that the equity method should be used to account for the investment.

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Definitions:

Negative Number

A real number that is less than zero, indicating a lack of something or a decrease in a given value.

Pearson Correlation Coefficient

The Pearson Correlation Coefficient is a measure of the linear correlation between two variables, ranging from -1 to +1, where 1 means a perfect positive correlation and -1 means a perfect negative correlation.

Negative Numbers

Numbers less than zero, represented by a minus (-) sign.

Critical Values

Specific points on the scale of a test statistic that determine the threshold for rejecting a null hypothesis.