Question
Consider the following scenario: an investor owns 10% of an investee company with publicly traded stock, and licenses technology to the investee for the production
Consider the following scenario: an investor owns 10% of an investee company with publicly traded stock, and licenses technology to the investee for the production of its sole product. None of the investors employees serve in the management of the investee company, nor sit on its board of directors. The license agreement prohibits the investee from certain business activities, such as entering into business arrangements with other companies without the investors consent, using the technology to develop products except as authorized by the investor, and expanding the business into new lines of business without the investors approval.
How should the investor account for its investment in the investee company?
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