Determining significant influence for equity method investees

Based on recent inquiries received by the CPEA related to equity-method investments, we have prepared this report covering how an investor determines whether it has the ability to exercise significant influence over the operating and financial policies of an investee and, therefore, apply the equity method of accounting. Too often, practitioners assume that significant influence automatically exists when an investor holds an investment of 20% or more of the voting stock of an investee. They fail to consider other factors