I know it works for your own Squads, I said i think it doesn't show for your Allies' Helper Squads (although it's counted in the player total power, oddly enough) xD
Equipment is easy to test: put a single 2* or 3* with 4 equip slot in a team (alone). Give her random equipment. Remove all equipment. Power doesn't change. Hence, Equipment isn't factored into Squad Power.