The equity method of accounting for a stock investment should generally be used when the investor owns 20%-50% of the investee's stock, because that level of stock ownership:

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The equity method of accounting is used when the investor has significant influence over the investee company, which is generally considered to be ownership of 20%-50% of the investee's stock. This is because the investor has the ability to participate in the investee's financial and operating policy decisions, which can have a significant impact on the investee's performance. While owning a controlling interest (more than 50% of the stock) would also result in the equity method being used, it is not necessary for the investor to have a controlling interest to use the equity method. Additionally, there is no government notification requirement for ownership of 20%-50% of the investee's stock.

The Equity Method of Accounting for a Stock Investment Should