What valuation method is used for equity holdings when ownership is between 20% and 50%?

When ownership of equity holdings falls between 20% and 50%, the equity method of valuation is applied. This method recognizes that the investor has significant influence over the investee's operations, which is characteristic of this ownership range. Under the equity method, the investor records their share of the investee's profits and losses in their financial statements, adjusting the carrying amount of the investment accordingly. This approach reflects the economic reality of the relationship more accurately, as it incorporates the investee's performance into the financial results of the investor.

The alternative methods, such as the cost method, consolidation, or fair value method, are not appropriate in this scenario. The cost method is typically used for investments where ownership is less than 20%, while consolidation is utilized when the ownership is greater than 50%, indicating control rather than influence. The fair value method may be used under certain circumstances but does not align with the criteria for investments where significant influence exists, which is why the equity method is the correct choice in this context.