In December of 2024, the US00 (United States) consolidation unit purchased a 35% stake in the CA00 (Canadian) consolidation unit for 130,000 EUROS (group currency). Since the ownership percentage is less than 50%, the Canadian subsidiary is consolidated with the equity method.
In general, the equity method is an accounting technique used to assess the profits earned by their investments in other companies. This method can only be used when the investing company holds significant influence over the company being invested in, but does not have full control over it, as with a majority voting interest. This usually occurs when a company owns 20% to 50% of another company's stock.
When using the equity method, the investing company records its share of the investee's profits as a boost to its own net income, and this investment is recorded on the balance sheet as a non-current asset.
The financial statements of an investee unit consolidated using the equity method are not included in the consolidated financial statements.