In one sentenceAn investment in a company over which the investor has significant influence without control, meaning it participates in its financial and operating decisions; usually presumed at ownership of 20% to 50%.
Simply put
If you own most of a company and control it, it is a subsidiary. If you own a small stake with no influence, it is an ordinary investment. Between them lies the zone of significant influence: a board seat and a voice that is heard, without the final decision.
An associate's items are not added into your statements; instead, the investment in it appears as a single figure measured using the equity method.
Example
A trading company owns 30% of a packaging factory and appoints two of the seven members of its board: the factory is an associate, and the investment in it is recorded using the equity method.
Don't confuse it with
SubsidiaryA subsidiary is under control and its statements are consolidated, while an associate is only under significant influence and is not consolidated.