Accounting and Finance for Bankers: MODULE C: SPECIAL ACCOUNTS: Joint Venture

Joint Venture

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Introduction

Where a businessman finds it difficult to undertake any business work or a venture alone, he may associate with other businessman. Such an association of persons is for a short period or for a particular venture and is known as 'Joint Venture'

a.      It is regarded as a temporary partnership without a firm name.

b.     It ceases with the completion of the task undertaken.

c.      Persons, who have come together, are called co-ventures and not partners.

d.     The co-ventures enter into a contract with each other, deciding about their capital contribution and share of profit.

e.      In the absence of any agreement, profit and losses are shared equally by the co-ventures.

'A commercial undertaking by two or more persons, differing from a partnership in that relate to disposition of a single lot of goods or the completion of a single project. Its duration is limited to the period in which goods are sold or the project is carried on.'

- Eric L. Kohler

DISTINCTION BETWEEN JOINT VENTURE AND PARTNERSHIP

Sr	Joint Venture	Partnership
1	No Name	Has a Name
2	Temporary in nature	Continues business
3	Patrons called Co-Venturers	Patrons are called partners
4	Completely depends on Contract	Partners have liabilities
5	No Separate books required	Separate books of account
6	Cash mode	Accrual Basis of account
7	Profit lose at Venture End	Profit Lose at year end

a.       In a joint venture, the association of persons is of temporary nature.

b.    Joint venture may also be called as a temporary/restricted partnership.

c.     The co-venturers enter into a contract with each other.