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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Morgan Inc. and Parker Company are considering entering into a joint venture arrangement. Under IFRS, what accounting alternatives are available to Morgan and Parker with respect to this joint venture? How does this compare with the options under U.S. GAAP?

To determine

Identify the accounting alternatives that are available to Incorporation M and Company P with respect to the joint venture and the manner in which it is compared with the options under U.S GAAP.

Explanation
  • According to IFRS, Equity method or proportionate consolidation can be used by Incorporation M and Company P could account for the joint venture.
  • Under equity method, Incorporation M and Company P would report the investment in the associate at cost and adjusted their proportionate share of income with the proportionate share of the dividend paid by the investee...

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