Chapter 30 Joint Venture Arrangements

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