Accounting for Joint Ventures Under IFRS

Very Easy Intercorporate Investments Joint Ventures

John and Mary have formed a joint venture to develop a new technology product. In this venture, both contribute equally to the investment and share the risks and rewards associated with the project's outcome. As they report their financial results, it is essential to understand how to account for the joint venture in their financial statements.

Which of the following statements best describes the accounting treatment for joint ventures under IFRS?

Joint ventures must always be consolidated fully in the financial statements of the investing companies.

Joint ventures can be accounted for using the equity method, reflecting the investor's share of net income.

Joint ventures should be reported at fair value in the financial statements of the investing companies.

Hint

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