- CFA Exams
- CFA Level I Exam
- Topic 3. Financial Statement Analysis
- Learning Module 10. Intercorporate Investments
- Subject 4. Joint Ventures
CFA Practice Question
Which statement is false for joint ventures accounting?
II. IFRS recommends the proportionate consolidation method.
I. The U.S. GAAP does not permit the proportionate consolidation method.
II. IFRS recommends the proportionate consolidation method.
Correct Answer: II
Both require the equity method.
User Contributed Comments 4
| User | Comment |
|---|---|
| cfaajay | U.S.GAAP does allow Proportionate consolidation for unincorporated entities ..such as in construction industry..but U.S.GAAP prefers equity method. |
| thebkr777 | Does this not contradict the chart they gave us? "US: Equity method. IFRS Equity or Proportionate consolidation" |
| SRI2010 | thebkr777, in my opinion, the second one is false because the IFRS doesnt explicity recommend the proportionate consolidation method. it is "either-or" |
| davidt876 | "Both IFRS and U.S. GAAP require the equity method of accounting for joint ventures" - is what the notes just said |