BU487 Lecture Notes - Lecture 17: Equity Method
Document Summary
Total revenue = 12 + 9. 6 + 7. 2 +3. 6 + 5. 1 + 1. 8 =39. 3. Total asset = 24 + 21 + 15 + 9 + 8. 4 + 3. 6 = 81. Take the greater of the two profit is greater at 7. 25. Profits = 31 + 26. 8 + 0. 66 + 0. 81 = 725. 2 types of joint arrangements: joint operations, joint ventures. Joint operations refer to those arrangements where the parties contribute resources but retain title to the resources. Accounting for joint operations is by the proportionate consolidation method: we only take the percentage of our interest, eliminate the proportion that. Similar to consolidations where intercompany sales are unrealized profits from intercompany transactions exist our task is to identify them and isolate them. Unrealized profit and intercompany sales are eliminated to the extent of the interested principal interest. In proportionate consolidate we add only the relevant principals interest from the. There is no one company that has absolute control.
