COMM-1107EL Chapter Notes - Chapter 8: Air Canada, Economic Model, Controlling Interest
14 Mar 2017
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Chapter 8 lo(cid:374)g-ter(cid:373) i(cid:374)vest(cid:373)e(cid:374)ts a(cid:374)d the ti(cid:373)e. Investor the entity that owns shares in a corporation. Investee the company that issued the shares. Short-term investments, as previously discussed, must be liquid and the investor must intend to either convert the investment to cash within the year or use it to pay a current liability. Long-term investments are investments that investors expect to hold for more than a year. Ifrs describes 3 categories of long-term share investments which depend on the percentage of ownership: non-strategic investments (> 20%, investments subject to significant influence (20-50%, investments in subsidiaries (50% +) Non-strategic investments are investments where the investor owns less than 20% of the voting shares of the investee, and thus is presumed to exercise no influence over the affairs of the investee. An investor may make a non-strategic (or passive) investment where the purpose is like that of short-term investing.
