# ASC 323-10-05: Investments—Equity Method and Joint Ventures — Overall — 05 Overview and Background Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/323/10/#05-overview-and-background) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-09T23:39:49.957Z to 2026-09-09T23:39:49.957Z Record version: sha256:fee8cefcd0e8da263ed0c721ea368f99b4d8429d79ed22bbb139155258063800 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 323-10-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/323/10/#05-overview-and-background) SEC content: no ##### [323-10-05-1](https://asc.understandingaccounting.org/asc/323/10/#323-10-05-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:39:49.957Z to 2026-09-09T23:39:49.957Z Record version: sha256:75b5819db27770a07a617130762152ff0d32df8ff9126289ea6eaf3085e16cfb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Codification contains several Topics for investments due to the differing accounting treatment for various forms of investments. The Topics include all of the following: 1. a Topic 320, Investments—Debt Securities 2. aa Topic 321, Investments—Equity Securities 3. b Topic 323, Investments—Equity Method and Joint Ventures 4. c Topic 325, Investments—Other. ##### [323-10-05-2](https://asc.understandingaccounting.org/asc/323/10/#323-10-05-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:39:49.957Z to 2026-09-09T23:39:49.957Z Record version: sha256:0fa140919e9aa98ddc9cf04f63004e2cf2525a5579955c63117d599447820cd1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Investments—Equity Method and Joint Ventures Topic includes the following Subtopics: 1. a Overall 2. b Partnerships, Joint Ventures, and Limited Liability Entities 3. c Income Taxes. ##### [323-10-05-3](https://asc.understandingaccounting.org/asc/323/10/#323-10-05-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:39:49.957Z to 2026-09-09T23:39:49.957Z Record version: sha256:c1ef0927d648d18f0031c8cbf50ef8292c922c45d6a3611bbd2560a45150acf4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Overall Subtopic addresses application of the equity method of accounting to investments within its scope. ##### [323-10-05-4](https://asc.understandingaccounting.org/asc/323/10/#323-10-05-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:39:49.957Z to 2026-09-09T23:39:49.957Z Record version: sha256:5ad632bb8b7942ec3ca61f26fa9bcf37c6b8a8a7712c219ef0ce3fa36f587d46 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Investments held in stock of entities other than [subsidiaries](https://asc.understandingaccounting.org/glossary/s/#subsidiary "An entity, including an unincorporated entity such as a partnership or trust, in which another entity, known as its parent, holds a controlling financial interest. (Also, a variable interest entity that is consolidated by a primary beneficiary.)"), namely [corporate joint ventures](https://asc.understandingaccounting.org/glossary/c/#corporate-joint-venture "A corporation owned and operated by a small group of entities (the joint venturers) as a separate and specific business or project for the mutual benefit of the members of the group. A government may also be a member of the group. The purpose of a corporate joint venture frequently is to share risks and rewards in developing a new market, product or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. A corporate joint venture also usually provides an arrangement under which each joint venturer may participate, directly or indirectly, in the overall management of the joint venture. Joint venturers thus have an interest or relationship other than as passive investors. An entity that is a subsidiary of one of the joint venturers is not a corporate joint venture. The ownership of a corporate joint venture seldom changes, and its stock is usually not traded publicly. A noncontrolling interest held by public ownership, however, does not preclude a corporation from being a corporate joint venture.") and other noncontrolled entities usually are accounted for in accordance with either the recognition and measurement guidance in Subtopic 321-10 or the equity method. This Subtopic provides guidance on application of the equity method.The equity method is an appropriate means of recognizing increases or decreases measured by generally accepted accounting principles (GAAP) in the economic resources underlying the investments. Furthermore, the equity method of accounting closely meets the objectives of accrual accounting because the [investor](https://asc.understandingaccounting.org/glossary/i/#investor "A business entity that holds an investment in voting stock of another entity.") recognizes its share of the earnings and losses of the [investee](https://asc.understandingaccounting.org/glossary/i/#investee "An entity that issued an equity instrument that is held by an investor.") in the periods in which they are reflected in the accounts of the investee. The equity method also best enables investors in corporate joint ventures to reflect the underlying nature of their investment in those ventures. ##### [323-10-05-5](https://asc.understandingaccounting.org/asc/323/10/#323-10-05-5) Pending content: no Source downloaded (UTC): 2026-09-09T23:39:49.957Z to 2026-09-09T23:39:49.957Z Record version: sha256:a661845041551dc2d69659ec364405d71159aa5746cc431fa7c09b8e30678f21 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The equity method tends to be most appropriate if an investment enables the investor to influence the operating or financial decisions of the investee. The investor then has a degree of responsibility for the return on its investment, and it is appropriate to include in the results of operations of the investor its share of the earnings or losses of the investee. Influence tends to be more effective as the investor's percent of ownership in the voting stock of the investee increases. Investments of relatively small percentages of voting stock of an investee tend to be passive in nature and enable the investor to have little or no influence on the operations of the investee. ##### [323-10-05-6](https://asc.understandingaccounting.org/asc/323/10/#323-10-05-6) Pending content: no Source downloaded (UTC): 2026-09-09T23:39:49.957Z to 2026-09-09T23:39:49.957Z Record version: sha256:00d0433cfe2db7946659d6717a1e89b5b87d07c140ca070fe7ac7c33a8e9e6c2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In addition to the joint venture guidance included in this Topic, the accounting and reporting for real estate joint ventures is addressed in Subtopic 970-323.