Significant influence is the power to participate in the financial and operating policy decisions of an entity, without having control or joint control over it. This concept is crucial for determining how an investment is accounted for, as it distinguishes between varying levels of ownership interest and their implications in financial reporting. It typically arises when an investor holds 20% to 50% of the voting power of an investee, but also considers other factors that may demonstrate influence, such as representation on the board or participation in policy-making decisions.
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