CFAI L2 2011 Mock Afternoon Q37 Why consolidation method? 2011, companies, company, instead

hariRaj

So the company is owned by 3 companies, which in my understanding should be a joint venture. Shall we use proportionate instead of consolidation method?

evolsteevol

btw, what does consolidation method mean? It seems to be acquisition method according to the answer

hardwork24

no, in a joint venture you have JOINT CONTROL
consolidation = acquisition method.
since Cupercino has CONTROL, not JOINT CONTROL , you use Ac. Method.
the other are equity since they do not have joint control or control. anyway since it’s a US GAAP probleme even if they had JOINT control they would have been consolidated with Equity method

towardsutopia21

I see. thanks!!

tarunajwani

Joint control is usually a 50%/50% split between 2 companies.  However, this control could be shared equally 1/3 between 3 investors, 1/4 between 4 investors etc

amqata

so joint venture can have

JonnyKay

on to the next test