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Equity Accounting

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Equity Accounting
A method of accounting whereby a corporation will document a portion of the undistributed profits for an affiliated company in which they own a position.

Notes:
The amount of undistributed profits that the corporation decides to document is generally equal to the percentage of equity it controls. In many cases, the profits of the affiliated company are never distributed to the corporation.


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company and previously accounted for its investment using a form of equity accounting under its local GAAP, the bank will be required, beginning in 2005, to report under IFRS.
When the equity investment is less than 20 percent, exclusive agreements between the traditional enterprise and the dot-com may trigger equity accounting, since an exclusive distribution agreement can constitute significant influence.
Equity accounting for those subsidiaries is no longer permitted.
 
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