A joint venture is a contractual arrangement by two or more parties that undertakes an economic activity that is subject to joint control.
The following are three types:
Jointly controlled operations
Jointly controlled assets
Jointly controlled entities
Joint control exists only when the strategic and operating decisions relating to the economic activity require the unanimous consent of all parties sharing control.
A venturer recognizes its interest in a jointly controlled operation by recognizing in its financial statements the assets that it controls, the liabilities and expenses that it incurs, and its share of the income that it earns from the sale of goods or services by the joint venture.
A venturer recognizes its interest in jointly controlled assets on a proportional basis. It also recognizes any liabilities or expenses it incurs, its share of liabilities or expenses incurred jointly, and any income from the sale or use of its share of the output of the joint venture.
Since joint ventures are partnerships, businesses can join together to work on a project for a ser period of time. Having joint ventures with other...
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