If an Investor Owns Less Than 20% of the Ordinary

question 101

Multiple Choice

If an investor owns less than 20% of the ordinary 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:

Decision Process

The sequence of actions and rational considerations undertaken to select an option among available alternatives.

Collection of Experts

A group of individuals with specialized knowledge or skills brought together to tackle specific problems or projects.

Crowdsourcing

The practice of obtaining information, ideas, or input by soliciting contributions from a large group of people, typically from an online community.

Group Decision Making

A collaborative process where multiple individuals come together to select a solution or determine a course of action from several alternatives.