Joint Venture Accounting Under IFRS

Medium Intercorporate Investments Joint Ventures

Consider the following scenario involving two companies, Alpha Inc. and Beta LLC, that have formed a joint venture named Gamma Corp. The purpose of this joint venture is to develop new technology for the renewable energy sector. Alpha Inc. owns 60% of Gamma Corp. while Beta LLC owns 40%. In the context of intercorporate investments, how should both Alpha Inc. and Beta LLC account for their investment in Gamma Corp. according to IFRS?

Alpha Inc. should consolidate Gamma Corp. fully in its financial statements, while Beta LLC should account for its investment using the equity method.

Both Alpha Inc. and Beta LLC should account for their investments in Gamma Corp. using the equity method.

Alpha Inc. should account for Gamma Corp. using the equity method, while Beta LLC should consolidate Gamma Corp. fully in its financial statements.

Hint

Submitted5.0K

Correct3.3K

% Correct66%