in FSA, when classify a security, dose equity method is a valid classification with : Trading, Available-for-sale, Available-for-sale, Equity Method ? I think Equity method is a valuation method as cost method, pooling method, etc. if not, what equity method refer to? Thanks.
If you own less than 20% of a company it is considered a passive investment (i.e. you don’t have control over them). In this case, you can classify it as Trading, Available-for-sale or Held-to-maturity. If you own 20-50% then you have to use the equity method to account for it. If it’s over 50%, you would use the consolidation method. Note that these are guidelines. If you have 18% for example, and you have influence, the equity method may be valid.