All of the following statements are correct, except, An investor may have significant influence even if it has 15% voting power. An investor may not have significant influence even if it has more than 20% voting power. Under the equity method that is used to account for investment in associates, cash dividends are treated as income. Share dividends do not result to a change in the total equity of the investee.

Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter9: The Cost Of Capital
Section: Chapter Questions
Problem 4MC: d. (1) What are the two primary ways companies raise common equity? (2) Why is there a cost...
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All of the following statements are correct, except,

  1. An investor may have significant influence even if it has 15% voting power.
  2. An investor may not have significant influence even if it has more than 20% voting power.
  3. Under the equity method that is used to account for investment in associates, cash dividends are treated as income.
  4. Share dividends do not result to a change in the total equity of the investee.
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