# Non-Operating Unconsolidated Subsidiaries, an Invested Capital Adjustment

By Joseph Noko · 2024-05-08 · Source: https://josephnoko.com/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 accounting[^1].

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.

## Notes

[^1]: equity method accounting. [en.wikipedia.org](https://en.wikipedia.org/wiki/Equity_method)