CFA Practice Question

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CFA Practice Question

Which statement is false for joint ventures accounting?

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
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