The guidance in ASC 323 applies to all reporting entities. Investments held in common stock and/or in-substance common stock (collectively, referred to as "common stock") of entities other than consolidated subsidiaries are usually accounted for by one of two methods—the equity method or the fair value method. The equity method should be applied when an investor has the ability to exercise significant influence over the operating and financial policies of the investee, unless the investor elects the fair value option available under ASC 825, Financial Instruments. See EM 2 for a discussion of whether an investor has significant influence.

If the investor elects the fair value option, the investor is still required to provide certain of the equity method disclosures described in ASC 323. See FSP 10.6 for further information on the required disclosures when an investor elects the fair value option.

Investments in partnerships and other joint ventures are generally accounted for using the equity method of accounting, as described in EM 1.3. See EM 1 for further guidance on which investments are within the scope of the equity method of accounting.