In Question 5, it is trying to compare ratios between the change from using Acquisition method to Joint Venture (U.S. GAAP rules). However, I’m very confused as to why under Joint Venture, which utilize equity method, it reports 50% of the net assets as “investment”… I thought that under equity method, you don’t report assets of the subsidiary in your balance sheet.
Why is this allowed as an exception to the rule of equity method in the case of JVs? and what does it mean by net assets as Investment?
Appreciate any explanation to this.