💡 When an investor organization purchases 40% of another organization's stock, it is generally presumed to have significant influence over the investee. Under Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS), the equity method is used when the investor owns between 20% and 50% of the voting stock, unless evidence suggests that significant influence does not exist. Under the equity method: The investor records its share of the investee’s net income or loss in its financial statements. Dividends received from the investee are treated as a reduction in the investment account (not recorded as dividend revenue). The investment account is adjusted based on the investor’s share of the investee’s profits or losses. خسائر ال᤭شكة المستثمرة.