The determination of whether an investor has the ability to exercise significant influence over an investee’s reporting and financial policies is a continual process. Accordingly, upon a change in facts and circumstances, the investor should determine whether its conclusion regarding the ability to exercise significant influence has changed. For example, in addition to a change in the ownership percentage, (1) a change in the investee’s governance or equity structure, (2) the investee’s becoming subject to significant foreign exchange restriction or other governmentally imposed uncertainties, or (3) the investee’s filing for bankruptcy may indicate that the investor’s conclusion regarding its ability to exercise significant influence over the investee’s reporting and financial polices is no longer appropriate.
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This publication provides comprehensive guidance; however, it does not address all possible fact patterns, and the guidance is subject to change. Consult a Deloitte & Touche LLP professional regarding your specific issues and questions.