Many companies have influential, but noncontrolling investments in other firms (defined as ownership of 20% to 50%). They will account for income from their equity ownership as a proportional share of the investee’s earnings as “Equity in Affiliates” on their income statement.
Income from equity in affiliates is typically reported after-tax by companies, since those earnings had already been taxed on the income statement of the investees.
Company A owns 20% of Company B, which just reported net income of $10 million. What should Company A record in the “Income from Equity in Affiliates” line item?