Appendix
E
Reporting
and
Interpreting
Investments
in
other
corporations
PowerPoint Authors:
Susan Coomer Galbreath, Ph.D., CPA
Charles W Caldwell, D.B.A., CMA
Jon A. Booker, Ph.D., CPA, CIA
Cynthia J. Rooney, Ph.D., CPA
McGraw­Hill/Irwin
Copyright © 2014 by The McGraw­Hill Companies, Inc. All rights reserved.
Passive
Investments
in
Debt
and
Equity
Securities
Passive
investments
are
made
to
earn
a
high
rate
of
return
on
funds
that
may
be
needed
for
future
purposes.
Investments
in
debt
securities
are
always
considered
passive
investments.
Equity security investments
are presumed passive if the
investing company owns less
than 20% of the outstanding
voting shares.
The investor is not
interested in controlling
or influencing the other
company.
E-2
Investments
in
Stock
for
Significant
Influence
Investments
made
with
the
intent
of
exerting
significant
influence
over
another
corporation.
The
ability
of
the
investing company to
have an important
Significant
Influence
impact on the
operating and
financial policies
of
20% - 50%
outstanding shares
another
company.
E-3