1. Potential voting rights from call options heldby an investor should be taken into account indetermining whether power over the investeeexists, but only when the call options are "out ofthe money".2. An investor's rights must be substantive togive rise to power over the investee.3. Protective rights such as the ability to removekey management personnel under restrictedcircumstances do not contribute to establishingpower over the investee.4. If unanimous consent is required from two ormore investors, this gives rise to power over theinvestee.Ture of false?

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Answered: 1. Potential voting rights from call…

Business/Professional Ethics Directors/Executives/Acct

8th Edition

ISBN:9781337485913

Author:BROOKS

Publisher:BROOKS

Chapter5: Corporate Ethical Governance & Accountabililty

Section: Chapter Questions

Problem 13.2EC

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Significant influence is Group of answer choices Deemed to exist when the investor is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. activities. The power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. The power to govern the financial and operating policies of an entity so as to obtain benefits from its
Which of the following statements is consistent with the principle of control as defined by IFRS 10 Consolidated Financial Statements? a. The investor must be exposed to a return from the investee. b. The investor has the ability to use its power over the investee to affect the amount of the returns from the investee. c. An investor yet to direct the relevant activities of an investee has no power over the investee. d. An investor cannot have control over an investee if another investor has existing rights to participate in the direction of the relevant activities.
Which of the following is an example of protective rights? Rights to appoint or remove another entity that directs the relevant activities The right of a party holding a non-controlling interest in an investee to approve the issue of equity or debt instruments Rights to veto any changes for the benefit of the investor All of the choices
Which of the following factors contributes to an investor having significant influence over an investee? Question 2 options: a) Insignificant transactions occur between the investor and the investee. b) The investor owns more than 50% of the common shares outstanding of the investee. c) There is an interchange of managerial personnel between the investor and investee. d) The investor is not represented on the board of the investee.
What is the possible agency conflict between inside owner/managers and outside shareholders? What are some possible agency conflicts between borrowers and lenders? How is it possible for an employee stock option to be valuable even if the firm’s stock price fails to meet shareholders’ expectations?
Please answer with reason for all why the option is correct and why the other options are incorrectPlease answer correct otherwise skip it The most recent example of the political process at work in standard-setting is the controversy surrounding the: A. Creation of the FASB. B. Accounting for employee stock options. C. FASB Accounting Standards Codification. D. Implementation of the fair value standard.
The role of management's intent increases the risk of material misstatement re: the Existence assertion for financial investments. Question options: True False
Which strategy would be best for Kelly to deploy if she thinks the stock market will decline and she wants to protect the downside, while maintaining any upside if she is wrong about the market situation: a Protective puts b Covered calls c Zero-cost collars
Substantial doubt exists regarding a client's ability to continue. The client must present its plans to mitigate the effects of the events and conditions. Which item is NOT an acceptable plan? a. Restructure debt to delay due date of Bonds Payable. b. Sell assets used in product production for cash. c. Issue Common Stock at market value. d. Decrease dividend requirements. e. Obtain cash by issuing notes.
Suppose you need additional capital to expand,and you sell some stock to outside investors. If youmaintain enough stock to control the company,what type of agency conflict might occur?
Which of the following is NOT normally regarded as being a good reason to establish an ESOP? a. To help retain valued employees. b. To increase worker productivity. c. To make it easier to grant stock options to employees. d. To enable the firm to borrow at a below-market interest rate. e. To help prevent a hostile takeover.
Which of the following actions would be most likely to reduce potential conflicts of interest between stockholders and bondholders? a. Compensating managers with stock options. b. Abolishing the Security and Exchange Commission. c. The use of covenants in bond agreements that limit the firm's use of additional debt and constrain managers' actions. d. Financing risky projects with additional debt. e. The threat of hostile takeovers.

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1. Potential voting rights from call options held by an investor should be taken into account in determining whether power over the investee exists, but only when the call options are "out of the money". 2. An investor's rights must be substantive to give rise to power over the investee.