What is joint venture? Explain various method of recording joint venture transaction . Give entries in each case?
Answers
Joint venture is the co-operation between two or more businesses or individuals in which each of them agrees to share the profit or loss and control in a certain enterprise.
The methods of recording joint venture transactions are as follows.
(1) Separate Set of Books. The following types of accounts are opened in a separate set of books
(a) joint bank account
(b) Accounts of co-venture and
(c) Joint venture account.
(2) Recording in the Books of one co-venture only -
In this method, all transactions are recorded by one of the co-ventures.
The following types of two accounts are opened in the books of a co-venture who is responsible for recording joint venture transaction.
Explanation:
A joint venture (JV) is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task.