A Controlling Influence Over the Investee Is Based on the Investor

question 20

Multiple Choice

A controlling influence over the investee is based on the investor owning voting shares exceeding:

• A) 50%.
• B) 30%.
• C) 20%.
• D) 10%.
• E) 40%.

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Definitions:

Operating Leverage

A measure of how revenue growth translates into growth in operating income, demonstrating the proportion of fixed versus variable costs a company has.

Fixed Costs

Expenses that remain constant regardless of how much is produced or sold, including rent, salaries, and insurance costs.

Accounting Break-Even

The point where total sales equal total expenses, and the company makes no profit but also incurs no loss.

Depreciation Expense

An accounting method of allocating the cost of a tangible asset over its useful life, representing how much of the asset's value has been used up over a period.