Concept Of Joint Ventures
A temporary kind of business activity carried on by more than on individual with a view to earning profit in a pre-agreed manner without giving a firm name to the business is known as joint venture.It is a temporary partnership between two or more persons for completing a particular adventure. The relationship between them is ceased as soon as that particular venture is completed.
The persons who enters into the joint venture agreement are called co-ventures. The joint venture agreement will be automatically terminated after completing the venture. The profits or losses are shared between the co-ventures according to their pre-agreed agreement. In the absence of agreement , the profits or losses are shared equally among themselves.
Features Of Joint Ventures
1. Joint venture is a special partnership without a firm name.
2. Joint venture does not follow the accounting concept 'going concern'.
3. The members of joint venture are known as co-ventures.
4. Joint venture is a temporary business activity.
5. In joint venture, profits ans losses are shared in agreed proportion. If there is no agreement regarding the distribution of profit, they will share profit equally.
6. Joint venture is an agreement for polling of capital and business abilities to be employed in some profitable venture.
7. At the end of venture, all the assets are liquidated and liabilities are paid off: if necessary the assets and liabilities could be shared by co-ventures.
8. Joint venture always follows cash basis of account
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