Based on Ohalin’s estimates, the amount of joint venture shareholders’ equity at 31 December 2018 included on the consolidated financial statements of each venturer will most likely be:

A. higher for BetterCare.

B. higher for Supreme Healthcare.

C. the same for both BetterCare and Supreme Healthcare.

BetterCare Hospitals, Inc. operates a chain of hospitals throughout the United States. The company has been expanding by acquiring local hospitals. Its largest acquisition, that of Statewide Medical, was made in 2001 under the pooling of interests method. BetterCare complies with US GAAP.
BetterCare is currently forming a 50/50 joint venture with Supreme Healthcare under which the companies will share control of several hospitals. BetterCare plans to use the equity method to account for the joint venture. Supreme Healthcare complies with IFRS and will use the proportionate consolidation method to account for the joint venture.
Erik Ohalin is an equity analyst who covers both companies. He has estimated the joint venture’s financial information for 2018 in order to prepare his estimates of each company’s earnings and financial performance. This information is presented in Exhibit 1.

Supreme Healthcare recently announced it had formed a special purpose entity through which it plans to sell up to $100 million of its accounts receivable. Supreme Healthcare has no voting interest in the SPE, but it is expected to absorb any losses that it may incur. Ohalin wants to estimate the impact this will have on Supreme Healthcare’s consolidated financial statements.

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EXHIBIT 1: Selected Financial Statement Forecasts for Joint Venture ($ Millions) Year Ending 31 December Revenue Operating income Net income 31 December Total assets Shareholders' equity 2018 1,430 128 62 2018 1,500 740