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ASC 323-10-45-1 requires an investor's share of earnings or losses from its investment in common stock accounted for under the equity method to be shown as a single amount on the income statement, except for its share of accounting changes reported in the financial statements of the investee, which should be classified separately in the investor's income statement. In addition, an investor may need to make other adjustments to its proportionate share of the earnings or losses of an investee (e.g., eliminating intercompany gains and losses, recognizing impairments at the investor level, converting the investee's financial statements to US GAAP), as further discussed in this section. Equity method investments can be aggregated for purposes of presenting the investor's share of earnings or losses in the income statement.
When practicable, the investee's financial information should be as of the same dates and for the same periods as presented in the reporting entity's financial statements. However, if the investee's financial information is reported on a lag, the reporting entity would ordinarily record its share of the earnings or losses of an investee using the most recently available financial statements, provided this approach is applied consistently. If an investor changes the period of the lag, that would generally be considered a change in accounting principle and require retrospective application and disclosures in accordance with ASC 250 See EM 4.4 for further information on lag reporting.
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