Foreign currency items. In this situation, the investment is recorded on the balance sheet at its historical cost. Equity accounting may also be appropriate where the holding falls outside this range and may be inappropriate for some entities within this range depending on the nature of the actual relationship between the investor and investee. The investor also records its percentage of the investee’s net income or loss on its income statement. This power includes representation on the board of directors , involvement in policy development, and the interchanging of managerial personnel. The following is a non-inclusive list of indicators that an investor may be unable to exercise significant influence:. Related Terms Depreciation Definition Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life and is used to account for declines in value over time.