What are equity income investments?

In other words, equity income investments are those known to pay dividend distributions. Equity income is money earned from stock dividends, which investors can access by owning dividend-paying stocks or funds. Income-paying stocks or funds are typically preferred by more conservative investors looking for long-term income.

How to account for equity investments in a company?

Accounting for equity investments, i.e. investments in common stock, preferred stock or any associated derivative securities of a company, depends on the ownership stake. Investment amounting to 0-20%, 20%-50% and more than 50% of the outstanding capital must be accounted for using fair value method, equity method and consolidation respectively.

Should equity method earnings be included in an investor's income statement?

The SEC staff has indicated that presenting equity method earnings from an investee within the operating income section of the investor's income statement is acceptable in very limited circumstances. The investor's income tax provision line would include any income tax levied against the investor for its share of the investee's results.