IFRS, GAAP Equity Method

“Vadney adds that U.S. GAAP requires equity method accounting for joint ventures, while under IFRS proportionate consolidation is preferred, but the equity method is permitted.”

Is there anything wrong with this statement? I know that GAAP requires equity method but I was under the impression that you could still use proportionate consolidation under IFRS, apparently you must use equity method under both IFRS and GAAP.

Yes, both prefer equity method and allow proportionate method under rare cases (which I am not aware of, frankly). The key is that they treat joint ventures identically.

According to CFAI online practice question solution (Wright Aerospace Case Scenario) - Under US GAAP, joint ventures must be accounted for using the equity method

Sure . . . now.

What about two years ago? Huh?

:wink:

failed at level 1 :confused: