Which of the Following Statements Is True Regarding Joint Ventures

question 26

Multiple Choice

Which of the following statements is true regarding joint ventures?

• A)Participants in a joint venture usually share profits equally,but share losses based on the percentage of contribution.
• B)Courts frequently apply sole proprietorship law to joint ventures.
• C)Participants in a joint venture usually share losses equally,but share profits based on the percentage of contribution.
• D)The joint venture is not automatically terminated when one of the members dies.
• E)A joint venture requires the filing of a formal agreement with the state.

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Definitions:

Equity Method Investment

A financial recording method for investments in other firms where the investor holds considerable influence without exerting complete control.

Consolidated Income Statement

A financial statement that combines the income statements of a parent company and its subsidiaries, showing the overall performance.

Step Acquisition

The process of acquiring control of another company in stages over time, rather than all at once.

Noncontrolling Interest

A minority stake in a company, where the stake does not afford the investor enough influence to dictate corporate policy.