Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. company a and company b entered into a joint ventu

Company A and Company B entered into a joint venture to manufacture components used by...

60.1K

Verified Solution

Question

Accounting

Company A and Company B entered into a joint venture to manufacture components used by both companies. The JV has been quite successfully for a number of years. Company A & B both contributed 50 percent of the equity when the joint venture was created. Company A purchases roughly 70 percent of the output of the joint venture and Company B purchases 30 percent. Company A & B have equal representation on the JVs board of directors and participate equally in its management. JV profits are distributed at year-end based on total purchases by each company.

Required:

Company A has been using the equity method to report its investment in the joint venture; however,

As financial vice president believes that each company should use pro rata consolidation. As a senior accountant at Company A, you have been asked to discuss those situations in which pro rata consolidation may be appropriate.

What are your recommendost:ations for Company A to continue to use the equity method or switch to pro rata consolidation? Remember to include citations using independent and authoritative support for your discussion.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Finance
1.2K views

Suppose you are going to receive $19,000 per year for 6 years. the appropriate interest rate...

Chemistry
1.2K views

Gaseous butane CH3CH22CH3 reacts with gaseous oxygen gas O2 to produce gaseous carbon dioxide CO2 and gaseous water H2O . If 36.4g of water is...

Programming
1.2K views

In C++ Define enumeration data type menuItemName with enumerators of PlainEgg, BaconAndEgg, Muffin, FrenchToast, FruitBasket, Cereal, Coffee, and...

Mechanical Engineering
1.2K views

Completely and thoroughly explain how the concepts of Engineering Economy could be used to help a...

Statistics
1.2K views

Provided below are summary statistics for independent simple random samples from two? normally-distributed populations. Conduct the required...

Biology
1.2K views

Anaerobic respiration occurs primarily in conditions where O excess carbon dioxide has built up O...

Geometry
1.2K views

Click here to watch the video Use identities to find values of the sine and...

Statistics
1.2K views

You may need to use the appropriate appendix table or technology to answer this question...

Calculus
1.2K views

6 The battery charge of a cell phone is tracked with a function over the...

Algebra
1.2K views

Simplify the complex rational expression 5a a 4 5 5 2 3a 4 2a 5a...

Accounting
1.2K views

Which of these contractual terms would lead a company to account for a lease contract...

Accounting
1.2K views

part b. compute the desired ROI per unit for m14-m16