A joint venture may result in significant liabilities that are not recorded on the balance sheet of the parent company.

Question

Quizplus · Accepted Answer

When a parent company enters into a joint venture, it may share in the liabilities of the joint venture. These liabilities may not be recorded on the parent company's balance sheet, as they are the responsibility of the joint venture entity. However, if the parent company is required to provide financial support to the joint venture, such as through guarantees or loans, these obligations would be recorded on the parent company's balance sheet.

A Joint Venture May Result in Significant Liabilities That Are