Impact of Joint Venture on ABC Corporation's Financials

Very Hard Intercorporate Investments Joint Ventures

ABC Corporation and XYZ Company have jointly formed a joint venture called InnovateTech. ABC owns 60% of the venture, whereas XYZ owns 40%. For the fiscal year ending December 31, 2023, InnovateTech reported total revenues of $2,000,000 and total net income of $500,000. ABC Corporation uses the equity method for its investment in InnovateTech. Which of the following statements correctly reflects the impact of the joint venture on ABC Corporation's financial statements for the year ending December 31, 2023?

ABC Corporation will recognize $300,000 in its income statement as income from its investment in the joint venture.

ABC Corporation will include $2,000,000 of revenues from InnovateTech in its consolidated revenues.

ABC Corporation will report an investment in InnovateTech at a value of $500,000 in its balance sheet.

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