Question

Discuss the arguments for and against the use of equity accounting for joint venture operations.

Answer 1

is more wed At a the equity method of accounting is more to assess the porofits econed by their investments in other companies. This equity method of accounting is more commonly wed when one Company is a joint certione has a recognizably greater level of influence or control over the venture than the other. Point a new value recorded in the company's profit and loss records, determined on baril on ccorrent cost. The conguments core : The equity method of accounting wed to allers the profits ecoined by their investments in other companies The firm neponts the income cooned on the investment of its income statement under the equity method, the reponted value size of equity investment. is based on

The objective IAS 28 c prescribe that accounting from investments in association and to ret out requirements for the application of equity method when acounting for Investments in associates with Joint Ventures when a investment is an auscciate on a soint venture is held by Or held inderctly through an enlity that Ventore capital Onganization as a mutual fund, cinit trust and similoon enlities, including investiment linked inscorance funds. the enksty, may elect to me arvore joint venturie af fair value forogh profit or loss in accordance with IFRS. 9. under equity method of accounting point Ventures, recognizes cit cost Increard or decreased to recognize poofit or loss the povestee ofters date of cquisition

or a pontion of an Investment for sale no longer meets the when a Investment in an associate or a joint venture previously callified as held Criteria to be so challified. It shall be accounted for using equity method retreos- pectively as as held as sale. inancial statements for the period Since classification as held sale shall be amended accordingly from the date of its callification for when an entity discontinues the care of equity method the entity shall account for all amounts previously recognised in other compra ehensive income in relation to do that Investment on the same bain as would have been required if the Invertee had directly disposed the related arrete oog liabilities