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FCCS Rule-Net Income (Equity) cannot limit the loss to the amount of investment cost- Joint Venture

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Summary:

Accounting for Joint Venture (JV) using Equity method. The share of loss cannot exceed the investment cost as the Joint Venture is a limited company. The standard consolidation rule cannot limit the loss to the ceiling.

Content (please ensure you mask any confidential information):

Applying the Net Income (Equity) rule, the share of JV profit/ loss can be posted to the parent company according to the JV's retained earnings-current with the entity ownership %.

However, the JV contains big loss e.g. 1000, while the investment cost is only 100. Since this is a limited company, the loss share to parent only limit to 100. The advance condition only pointing the data value for retained earnings-current (as this is the selected account for redirection) but not the investment cost account.

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