Chapter 30 Joint Venture Arrangements

Lecture Topics Structures and characteristics Accounting for joint ventures Compatibility with international accounting standards Disclosure

Lecture References Text - Chapter 30 AASB - 1006

Key Concepts Joint venture Management agreement Shared control Agency Good faith Joint tenancy

Structures and Characteristics The insignificance of names Major common characteristics Joint venture agreement Management agreement Number of participants Contributions Finite life

Structures and Characteristics Shared control The structures Partnership joint ventures Agency Good faith Joint tenancy Incorporated joint ventures

Structures and Characteristics The structures Joint venture operations Liability Fiduciary obligations Joint venture assets

Joint Ventures Joint Venture Entities Joint Venture Operations Joint Venturer Partnership Other Joint Venture Entities

Structures and Characteristics Distinguishing the structures Status Impermanence In common Separate ventures Profit sharing

Structures and Characteristics Distinguishing the structures Product sharing Business undertaking Special purpose entities

Structures and Characteristics Review of joint venture operations Definition problems Flexibility Taxation

Accounting for Joint Ventures Incorporated and partnership structures The venture The venturers Each reports own interest One-line mode Off-balance problems

Accounting for Joint Ventures Accounting for joint venture operations Accounting records Contribution received Costs incurred Production output Assets and liabilities held

Accounting for Joint Ventures Accounting for joint venture operations Disclosure Joint venture operations Joint venture entities General AASB 1040 disclosures

Accounting for Joint Ventures Accounting for joint venture operations Line-by-line method Each venturer takes a/c of its share of each venture asset, cost and liability for which there is shared responsibility

Accounting for Joint Ventures Application of methods to a production joint venture Determination of: Cost of assets Amounts to charge for asset use/consumption

Accounting for Joint Ventures Transactions between venturers Assets transferred at fair value Profit/loss if different to carrying value in contributor’s books Compatibility with IAS 31

Joint Ventures Jointly Controlled Operations Venturers’ own and consolidated accounts - cost method Jointly Controlled Assets Venturers’ own and consolidated accounts - line by line method Jointly Controlled Entities Venturers Investors

Other Considerations Service contributions Non-monetary assets Contribution not proportional to share of costs and output Liquidity

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