An Investor Who Owns 11% of an Entity's Voting Shares

question 20

Multiple Choice

An investor who owns 11% of an entity's voting shares

• A) must use the equity method.
• B) would be likely to prepare consolidated statements.
• C) may have significant influence over the investee if the shares are closely held.
• D) may have significant influence over the investee if the shares are widely held.

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Definitions:

Interest Income

Income earned from deposit accounts or investments that pay interest, such as bonds and savings accounts.

Financial Assets

Assets that derive value from a contractual claim, such as stocks, bonds, bank deposits, and other investments.

Real Assets

Physical or tangible assets such as property, commodities, and natural resources that have intrinsic value.

Net Income

Net income refers to the total profit of a company after all expenses, taxes, and costs have been subtracted from its total revenue.