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Basic Question 1 of 6

Which statement is false for joint ventures accounting?

I. The U.S. GAAP does not permit the proportionate consolidation method.
II. IFRS recommends the proportionate consolidation method.
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User Contributed Comments 4

User Comment
cfaajay U.S.GAAP does allow Proportionate consolidation for unincorporated entities ..such as in construction industry..but U.S.GAAP prefers equity method.
thebkr777 Does this not contradict the chart they gave us? "US: Equity method. IFRS Equity or Proportionate consolidation"
SRI2010 thebkr777, in my opinion, the second one is false because the IFRS doesnt explicity recommend the proportionate consolidation method. it is "either-or"
davidt876 "Both IFRS and U.S. GAAP require the equity method of accounting for joint ventures" - is what the notes just said
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Learning Outcome Statements

describe the classification, measurement, and disclosure under International Financial Reporting Standards (IFRS) for 1) investments in financial assets, 2) investments in associates, 3) joint ventures, 4) business combinations, and 5) special purpose and variable interest entities;

distinguish between IFRS and US GAAP in their classification, measurement, and disclosure of investments in financial assets, investments in associates, joint ventures, business combinations, and special purpose and variable interest entities;

analyze how different methods used to account for intercorporate investments affect financial statements and ratios.

CFA® 2025 Level II Curriculum, Volume 2, Module 10.