A liquidating dividend represents a return of the shareholder's original investment. You use the fair value method if you do not exert significant influence over the investee. Sharon has only received regular dividends before and is not familiar with a liquidating dividend. What Is a Liquidating Dividend? Fair Value Method Generally accepted accounting principles assume that you don't have significant influence over an investee if you own less than 20 percent of its voting shares. Conversely, if your 35 percent investment allows you to install several board members and control investee actions, you might be justified in consolidating the investment into your own financial reporting.