When two companies form a joint venture and each company owns exactly 50% of the joint venture

Question

Quizplus · Accepted Answer

When two companies form a joint venture and each company owns exactly 50% of the joint venture, the equity method is used, and line-by-line consolidation is not required. This is because there is no controlling interest, and both companies have an equal say in the management of the joint venture. The cost method is not used because it does not reflect the economic reality of the situation. The parent company is not determined based on net assets in a joint venture.

When Two Companies Form a Joint Venture and Each Company