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The ownership of less than 20% creates an investment position, carried at historic book or fair market value (if available for sale or held for trading) in the investor's balance sheet. There are 16 references cited in this article, which can be found at the bottom of the page. He has over 40 years of experience in Business & Finance. Lewis is a retired corporate executive, entrepreneur, and investment advisor in Texas.
Equity accounting is usually applied where an investor entity holds 20–50% of the voting stock of the associate company.He has been working as a senior accountant for leading multinational firms in Europe and Asia since 2007.Cole-Ingait holds a Bachelor of Science Degree in accounting and finance and Master of Business Administration degree from the University of Birmingham.Equity accounting may also be appropriate where the holding falls outside this range and may be inappropriate for some entities within this range depending on the nature of the actual relationship between the investor and investee.Control of the investee, usually through ownership of more than 50% of voting stock, results in recognition of a subsidiary, whose financial statements must be consolidated with the parent's.