Investor versus Investee - Essay Example

The investor's report is a report that accounts for the total investments in a firm based on the degree of influence that the investor can implement over the investee’s operations and the financial regulations in the firm. Equity security simply refers to the investment issued by another firm which is usually accounted for by determining the amount of control and influence the investor has over the operating decisions on the issuing of stock (Bartzokas & Mani, 2004). From the report, the investor can influence the decision of the investee on crucial decisions. The investor acquires a significant influence when he/she has a stock of 20 & 50 percent of the total stock.

The report indicates the investor’s equity about that of the investee on the income statement after carrying out all the necessary adjustments on the investment balance before determining the dividends received. According to Organization for Economic Co-operation and Development, (2011), the equity recorded on the investee’s income is the investors’ share in the reported income after carrying out the amortization on the net investment. The report also indicates the losses incurred in the income. The investor also gains control when the rights offer an opportunity for the current ability that coordinates the relevant activities in the firm. The power of an investor is determined based on the concepts of relevant activities and the existing rights in the firm. Read More