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After initial recognition, the investment is accounted for using the equity method. Under the equity method, the carrying amount of the investment is adjusted to reflect the investor's share of the joint venture's profits or losses. If the joint venture reports net income, the investor increases the carrying amount of its investment and recognizes its share of the net income as income on its own income statement. Conversely, if the joint venture reports a net loss, the investor decreases the carrying amount of its investment and recognizes its share of the net loss as an expense on its income statement.
