Non-Operating Unconsolidated Subsidiaries, an Invested Capital Adjustment

Unconsolidated subsidiaries, also referred to as investments in associates, investments in affiliated companies, and equity investments, are businesses wherein a firm has a significant stake that falls short of control, which equates to a 20% to 50% stake, and as such, they come under equity method accounting¹. 

When I determine that unconsolidated subsidiaries are non-operating, either because they are disclosed as such, with the income bundled into a non-operating line item, or because disclosure is unclear, I remove them from my calculation of invested capital.