osakkuusmenetelmään

Osakkuusmenetelmä is a Finnish term referring to the equity method of accounting. This accounting principle is used when an investor has significant influence over an investee company, but does not have control. Significant influence typically means holding between 20% and 50% of the voting shares.

Under the equity method, the investment is initially recorded at cost. Subsequently, the investor recognizes its share of the investee's net income or loss in its own income statement. When the investee pays dividends, the investor's investment account is reduced. The carrying amount of the investment is adjusted to reflect the investor's share of the investee's profits and losses.

This method is designed to reflect the economic reality of the relationship between the investor and the investee when there is significant influence. It ensures that the investor's financial statements provide a more accurate picture of its investment's performance. The equity method is contrasted with the cost method, used for passive investments with no significant influence, and consolidation, used when an investor has control. Finnish accounting standards, as well as international standards like IFRS, permit or require the use of the equity method in specific circumstances.