Question

define equity method

Answer 1

The equity method is an accounting technique used to determine the value of an investment in another company when the investor has significant influence, but not control, over the investee. Under the equity method, the investor records its share of the investee's profits or losses on its own income statement, and adjusts the value of the investment on its balance sheet to reflect the investor's proportionate ownership of the investee. This method is typically used when the investor owns between 20% and 50% of the investee's voting stock.