Joint Venture: In proportion Consolidation Technique  Equity Method Essay

Joint Venture:

Proportionate Consolidation Approach

&

Fairness Method

Donna Marciana W. Diwa

Modadv1– K32

10926739

June eleven, 2012 - Monday

INTRODUCTION

Joint venture is identified as a topic of study due to massive rise in international joint ventures throughout the business globalization and because in the different partnership accounting procedures across countries. The raising trend to create financial statements which are clear of errors and misstatements bring about the competitiveness of various firms when it comes to stable with the correct disclosures set forth by the Foreign Accounting Standard. These disclosures requirements are created to guide diverse firms in to coming up with a monetary statements that are useful in your decision making process of users of economic information. Around the world accounting methods for joint ventures change between in proportion consolidation and equity approach because countries differ at their definition of what creates a joint venture and their approved accounting treatment. The newspaper provides the initially empirical a comparison of the proportionate consolidation and equity methods of accounting intended for joint ventures which detects the evidence that venturer economical statements well prepared using in proportion consolidation pertaining to joint venture pursuits provide better predictions of future profitability than do financial assertions prepared using the equity technique. This increased predictive potential suggests that proportionate consolidation may have more relevance than the value method for marketplace participants and users of financial information which are interested in forecasting future performances and productivity of a organization.

THE JOURNAL ARTICLE

Background

Joint Venture contains a varying explanation across the globe which in turn led to diverse interpretations and accounting treatment options. A number of factors prompted the standard setting physique to reexamine the joint ventures issue in the early 1990's....



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