HOMEWORK 8 Essay Example | Topics and Well Written Essays - 250 words - 1

HOMEWORK 8 - Essay Example The investor acquires a significant influence when he/she a stock of 20 & 50 percentage of the total stock. The report indicates the investor’s equity in relation to that of the investee on the income statement after carrying out all the necessary adjustments on the investment balance before determining the dividends received. According to Organization for Economic Co-operation and Development, (2011) the equity recorded on the investee’s income is the investors’ share in the report income after carrying out the amortization on the net investment. The report also indicates the losses incurred in the income.The investor also gain the control when the rights offer an opportunity on the current ability that coordinates the relevant activities in the firm. The power of an investor is determined basing on the concepts of relevant activities and the existing rights in the firm. The investor gains the control through the voting rights and the other contractual arrangements in the firm. In general, the investor acquires full control when the existing rights provide current liability that directly affects the investee’s returns. In the assessment process, all the substantive rights are put into consideration. Bartzokas & Mani states that the investor has total control on specific assets of the investee in the firm. The voting rights must not dominate the control of the stock as all the administrative tasks must be put into