Proportionate consolidation is the method that integrates only the group's share of each line of a jointly controlled entity. If a group holds 50 percent of a joint venture, half of its revenue, half of its assets and half of its liabilities are added to the group accounts, line by line. Unlike full consolidation, it produces no minority interests: nothing is integrated beyond the share held.
It applies to joint control, where decisions require the unanimous agreement of the partners. The typical case is a project company or a jointly held distribution structure with two shareholders at 50 percent each, neither able to decide alone.
The two frameworks diverge here, and it matters when reading group accounts. IFRS 11 removed proportionate consolidation for joint ventures: since 2013 they are accounted for under the equity method, which moves an activity from the revenue line to a single equity line. French rules retained proportionate consolidation for jointly controlled entities. Two groups with identical economics can therefore publish very different revenue depending on the framework applied.
Operationally, it introduces a specific difficulty for the consolidation scope: internal flows with a proportionately consolidated entity are eliminated only up to the percentage integrated, not in full. A 100 000 euro flow with a 50 percent joint venture is eliminated for 50 000. Getting that partial elimination right presupposes that both sides recorded the same 100 000 in the first place.
Phacet's intercompany flow reconciliation agent validates the underlying reciprocal position before any percentage is applied to it, so the partial elimination rests on an agreed figure rather than a declared one. See intercompany elimination for the elimination mechanics.
