When an Investor Owns 20% to 50% of the Voting

question 27

Essay

When an investor owns 20% to 50% of the voting stock of an investee company, the investor is presumed to exercise significant influence over the investee unless there is evidence to the contrary.
Required:
(1.) What factors could be evidence of significant influence?
(2.) What factors could be evidence of lack of significant influence?

Calculate the production capacity within time and labor constraints.

Set pricing based on learning curves and cost-plus pricing strategies.

Understand the concept of a learning curve and its application in time and cost estimation.

Calculate the time taken for the first unit based on a given learning curve percentage and the time taken for a subsequent unit.

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Definitions:

Indirect Method

A method used in cash flow statements where net income is adjusted for items that affected reported net income but did not result in an actual cash flow.

Direct Method

A cash flow statement presentation that lists actual cash inflows and outflows from operating activities.

FASB

The Financial Accounting Standards Board (FASB) is an organization responsible for establishing and improving financial accounting standards in the United States.

Net Cash Flow

The total amount of money being transferred into and out of a business, especially as affecting liquidity.