How is the equity investment in a company between 20-50% treated?

When an investor holds an equity investment in a company between 20% and 50%, it indicates a significant influence over the investee, but not full control. Under these circumstances, the equity method is applied for accounting purposes. This means that the investment is recorded on the investor's balance sheet at cost and subsequently adjusted for the investor's share of the investee's profits or losses, as well as any distributions received, such as dividends.

Using the equity method allows the investor to reflect its proportional share of the investee's earnings in their financial statements, providing a more accurate representation of the economic reality of the investment. This approach recognizes that the investee's performance impacts the investor’s financial results, which aligns with the concept of significant influence.

The other options do not apply in this scenario. For example, measuring the investment at market price would be more relevant if the investment falls under fair value accounting, usually applicable to investments under 20%. Consolidation is reserved for controlling interests, typically above 50%. Lastly, recording the investment only when profits are recognized would not capture the ongoing relationship and share of profits adequately as the equity method does.