The equity method and the consolidation method are two different ways of accounting for investments in other companies. The equity method is used when an investor has significant influence over the investee, but does not have control. Under the equity method, the investor records its share of the investee’s net income as income on its own financial statements. The consolidation method, on the other hand, is used when an investor has control over the investee. Under the consolidation method, the investor combines the financial statements of the investee with its own financial statements, as if the two companies were one entity. The main difference between the two methods is that the equity method only records the investor’s share of the investee’s income, while the consolidation method includes all of the investee’s income and expenses in the investor’s financial statements.😀