If an Investor Owns Less Than 20% of the Common

question 260

Multiple Choice

If an investor owns less than 20% of the common shares of another corporation as a long-term investment,

• A) the equity method of accounting for the investment should be employed.
• B) no dividends can be expected.
• C) it is presumed that the investor has relatively little influence on the investee.
• D) it is presumed that the investor has significant influence on the investee.

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Definitions:

Leadership Style

The manner and approach of providing direction, implementing plans, and motivating people.

Deliver Efficient Results

Achieving objectives or outputs in an effective manner with minimal waste of time, effort, or resources.

Persuasion

The act or process of influencing someone's beliefs, attitudes, intentions, motivations, or behaviors through argument, reasoning, or appeal.

Avoid Punishment

A motivation strategy where actions are taken to evade consequences, often seen in contexts involving rules, regulations, or undesirable outcomes.