Accounting at first glance seems to be fairly simple. If you add together your income and take away your liabilities and deductions you get the difference. Things are actually much more complex because the initial numbers are not always surface value. Much like a college football ticket, the face value may be $40 but most alumni pay contributions in order to be able to purchase the ticket so
. really they probably spent closer to $100 per ticket. When using the equity method of accounting for investments, you are moving beyond the face value you paid for the stocks. It looks at the difference in purchase price and actual value after all is said and done. For some great information on the way it works go here http://www.ehow.com/how_4450893_use-equity-method-accounting-investments.html. This is most likely the method you will use if you own 20% or more of the stock.
