{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/323/970/#25-recognition","source":"FASB Accounting Standards Codification, Basic View","usage":"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.","topic":"323","topic_title":"Investments—Equity Method and Joint Ventures","subtopic":"323-970","subtopic_title":"Real Estate—General","section":{"number":"25","label":"25 Recognition","anchor":"25-recognition","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"323-970-25-1","para":"25-1","html":"
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Paragraph 970-810-25-2 states that a noncontrolling investor in a general partnership shall account for its investment by the equity method and should be guided by the provisions of Topic 323.
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Many provisions of Topic 323 are appropriate in accounting for investments in certain unincorporated entities. The principal difference, aside from income tax considerations, between corporate joint ventures and general partnerships is that the individual investors in general partnerships usually assume joint and several liability. The equity method, however, enables noncontrolling investors in general partnerships to reflect the underlying nature of their investments in those ventures as well as it does for investors in corporate joint ventures. Accordingly, investments in noncontrolled real estate general partnerships shall be accounted for and reported under the equity method.
","snippet":"Many provisions of Topic 323 are appropriate in accounting for investments in certain unincorporated entities. The principal difference, aside from income tax considerations, between corporate joint ventures and general …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3ad17f421ec9c797aa81dd9691fcb7504b19d7a2c4352c58a074e53b0d73b979","downloaded_from":"2026-09-09T23:42:49.098Z","last_downloaded_at":"2026-09-09T23:42:49.098Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479142","source_sha256":"9b46c41c20e389bba468935460b872ca19e07909ea3c60c739c45e7222d9f72e"}},{"citation":"323-970-25-4","para":"25-4","html":"
An entity shall apply the one-line equity method of presentation in both the balance sheet and the statement of income. Pro rata consolidation is not appropriate except in the limited circumstances described in paragraph 810-10-45-14. Topic 323 shall be used as a guide in applying the equity method.
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For guidance on determining whether a general partner or a limited partner shall consolidate a limited partnership or apply the equity method of accounting to its interests in the limited partnership, see paragraph 970-810-25-3.
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The equity method of accounting for investments in general partnerships is generally appropriate for accounting by limited partners for their investments in limited partnerships. A limited partner's interest may be so minor that the limited partner may have virtually no influence over partnership operating and financial policies. Such a limited partner is, in substance, in the same position with respect to the investment as an investor that owns a minor common stock interest in a corporation, and, accordingly, the limited partner should account for its investment in accordance with Topic 321.
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Paragraph superseded by Accounting Standards Update No. 2016-01.
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If the substance of the partnership arrangement is such that the general partners are not in control of the major operating and financial policies of the partnership, a limited partner may be in control. An example could be a limited partner holding over 50 percent of the limited partnership's kick-out rights through voting interests in accordance with paragraph 810-10-15-8A. A controlling limited partner shall be guided in accounting for its investment by the principles for investments in subsidiaries in Topic 810 on consolidation. Noncontrolling limited partners shall account for their investments by the equity method and shall be guided by the provisions of Topic 323, as discussed in the guidance beginning in paragraph 970-323-25-5, or by the guidance in Topic 321.
","snippet":"If the substance of the partnership arrangement is such that the general partners are not in control of the major operating and financial policies of the partnership, a limited partner may be in control. An example could…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:206cbfce1dc8d7b9805e2fefd3a9b94908832ab2cbbb20bc360241d663b632f7","downloaded_from":"2026-09-09T23:42:49.098Z","last_downloaded_at":"2026-09-09T23:42:49.098Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479142","source_sha256":"9b46c41c20e389bba468935460b872ca19e07909ea3c60c739c45e7222d9f72e"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:20ec4d98df5b606aadc22dfbb7bffa9eb7a033005af812540d101b917dc0820d","downloaded_from":"2026-09-09T23:42:49.098Z","last_downloaded_at":"2026-09-09T23:42:49.098Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479142","source_sha256":"9b46c41c20e389bba468935460b872ca19e07909ea3c60c739c45e7222d9f72e"}},{"block":null,"heading":"Corporate Joint Ventures","paragraphs":[{"citation":"323-970-25-9","para":"25-9","html":"
Topic 323 provides the standards for use of the equity method for corporate joint ventures and includes guidance for applying that method in the financial statements of the investor. That Topic applies to corporate joint ventures created to own or operate real estate projects.
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Accordingly, an investment in a corporate subsidiary that is a real estate venture shall be accounted for by the investor-parent using the principles applicable to investments in subsidiaries rather than those applicable to investments in corporate joint ventures.
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Noncontrolling shareholders in such a real estate venture shall account for their investment using the principles applicable to investments in common stock set forth in Topic 321 or 323.
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If real property owned by undivided interests is subject to joint control by the owners, the investor-venturers shall not present their investments by accounting for their pro rata share of the assets, liabilities, revenues, and expenses of the ventures. Most real estate ventures with ownership in the form of undivided interests are subject to some level of joint control. Accordingly, such investments shall be presented in the same manner as investments in noncontrolled partnerships.
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See the Acquisition, Development, and Construction Subsection of Section 310-10-25 for a discussion of when acquisition, development, and construction arrangements are required to be accounted for as a real estate joint venture rather than a loan. In those circumstances, the Acquisition, Development, and Construction Subsection of Section 310-10-35, and the Acquisition, Development, and Construction Subsection of Section 310-10-40 provide further guidance for accounting for such arrangements.
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