Joint Venture

joint venture

Method	Equity	Proportionate consolidation
Total assets	Low	High (*2)
Total liabilities	Low (*4)	High (*2)
Total equity	same	same
Revenue	N/A (*1)	High (*5)
Expense	N/A (*1)	High (*5)
Net income	same (*3)	same (*3)

(*1) None of the joint venture's revenues and expenses are reported under the equity method.
(*2) Including pro-rata ownership of the separate assets and liabilities of the joint venture. The investment in the joint venture is NOT included as an asset.
(*3) The proportion of income from the joint venture is reported separately, so that net income is the same under either method.
(*4) None of the joint venture's debt is reported by the investing company.

(*5) The proportionate share of the purchased firm's revenue and expenses would be reported on the joint venture holding company's income statement, increasing both revenues and expenses.