(Going off memory)
Basically the FV method is like any other investment. If it helps, think of it like a bond. If the investment pays cash out, you get to book revenue. Like a bond, the value of the asset is the price out on the market.
So you have two sources of income. 1) The cash payments (dividends) 2) the changes in FV (which I think goes to OCI since you hold it as AFS).
Equity method, two ways of seeing it. First is that it's like a bank account. Second is that it's sort of like an extension of the company, but instead of consolidating, you're only putting on the books your share of the shareholder's equity.
Like a bank account, you earn income when you earn it, not when you withdraw it. If you earn income, but deposit it in the account, that raises the value of the account. If you withdraw from the account (dividend), not income, but does lower the value of the account.
More conceptually, with the equity method, you have enough control that you're seen as being able to dictate when the dividends can be paid out. So when your investment earns income, you theoretically have control over that. You could theoretically demand a dividend be paid out.
Imagine if we didn't do the equity method. You could time revenue then. If times are bad, you could pop up revenue by having your equity investment distribute out dividends. It also distorts revenue if investors can only see it at face value, since dividends have nothing to do with future revenue, it's just a matter of you voting to have your investment pay out a dividend. On the other hand, having revenue reflect the earnings of the investment makes sense. If there's a recession, your investment's net income probably will go down too, and investors will have an expectation that both you and your investment aren't going to generate a lot of net income in the future.
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