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In determining whether the equity method should be applied to an investment in common stock, an...

In determining whether the equity method should be applied to an investment in common stock, an investor should consider whether it can exercise significant influence. Significant influence is characterized by certain quantitative factors (20% ownership) and qualitative factors. What are the six qualitative factors an investor should consider? Cite the source for your answer.

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Answer #1

answer:

  • section 1
  • the ASC 323-10-15, FASB acoounting standard codifications states-
  • the value strategy has a tendency to be most suitable if a speculation empowers
  • the speculator to impact the working or monetary choices of the investee
  • that implies, a financial specialist ought to consider wheather it can practice noteworthy impact.
  • section 2
  • the qualiative elements are as per the following
  • 1. money related approaches
  • 2. opearating arrangements
  • 3. pertinence
  • 4. unwavering quality
  • 5. social patterns
  • 6. qualities and in-substance of normal stock and so on.
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