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Chapter 30 Joint Venture Arrangements

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

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Chapter 30 Joint Venture Arrangements

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  1. Chapter 30Joint Venture Arrangements

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

  3. Lecture References • Text - Chapter 30 • AASB - 1006

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

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

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

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

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

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

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

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

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

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

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

  15. 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

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

  17. 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

  18. 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

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

  20. Where to get more information • Other courses • List books, articles, electronic sources

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