Characteristics of Joint Venture :
Some important features of joint venture business are as follows:
- It is short duration special purpose partnership, parties in venture are called co-venturers.
- Co-venturers may contribute funds for running the venture of supply inventories from their regular business.
- Co-venturers share profit/loss of the venture at an agreed ratio likewise partnership.
- Generally, profit/loss of the venture is computed on completion of the venture.
- Going concern assumption of accounting is riot appropriate for joint venture accounting.
There does not arise problem of distinction between capital and revenue expenditure. Plant, machinery and other fixed assets when used in venture are first charged to venture account at cost. On Completion of venture such assets are revalued and shown as revenue of the venture.
Thus, accounting approach for measurement of venture profit is totally different.
