Holding equity shares shown under "inventories"

A company's investment in another company is recorded as an asset on the balance sheet, not as inventory. The equity method of accounting is used to record the investment on the balance sheet and income statement:

The investment is recorded at its historical cost, and then adjusted based on the investor's percentage of ownership.

The investor company records any profit or loss from the investment as profit or loss to the company itself

The equity method is used when a company has a significant investment in another company, usually 20% or more. This is because the investor has some degree of influence over the company's performance, profit, and decisions