ACCA Applied Knowledge · Financial Accounting · Associates
Under IAS 28, which statement correctly describes significant influence?
Significant influence is the power to participate in the investee's financial and operating policy decisions without having control or joint control over them. The power to govern those policies to obtain benefits describes control, which indicates a subsidiary instead.
- AThe power to participate in the financial and operating policy decisions of the investee without control or joint control of themCorrect
- BThe power to govern the financial and operating policies of the investee so as to obtain benefits from its activities
- CThe contractually agreed sharing of control over an arrangement
- DThe right to receive at least 50% of the investee's dividends
Explanation
IAS 28 defines significant influence as the power to participate in, but not control, the investee's financial and operating policy decisions. The second option describes control, and the third describes joint control.
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