Which of the following is correct about joint operations?
A)Joint operation is not a type of joint arrangement.
B)Joint operation is the same as a joint venture.
C)Proportionate consolidation is used for a joint operation.
D)Equity method of accounting is used for a joint operation.

Question

Quizplus · Accepted Answer

Proportionate consolidation is the correct accounting method for joint operations. Joint operation is a type of joint arrangement in which two or more parties have jointly controlled the asset or assets, and have rights to the assets and obligations for the liabilities related to the arrangement. It is not the same as a joint venture, which is a specific type of joint arrangement where the parties have agreed to carry out an economic activity together, with shared control and risks. The equity method of accounting is used for joint ventures.

Which of the Following Is Correct About Joint Operations