1.

Meaning of Joint Venture

2.Features of JV
3.Need & Objectives of JV
4.Joint Venture Vs Partnership
5.Accounting Treatment of Joint Venture
6.Methods of Performing Venture
Temporary Partnership two or more than two persons without
the use of the firm name,

They combined for the Execution of a specific transaction and

divide the proft and loss thereof in the agreed ratio but if
agreement is silent regarding this point then in equal ratio.

Example:- A and B undertake the job of construction of a

hospital (for sum of Rs 20,00,000).
A & B are the co- venturers
Construction of Building is called Venture
1. Agreement between two or more than two
persons for a temporary partnership.

2. The venture is made for the execution of a

specific venture.

3. Parties in Venture are called Co-Venturer or Joint

Venturer.

4. Co-Venturer may contribute fund for serving

the venture or supply from their regular
business.
5. Their purpose is to make profit & to distribute that
profit among all co- ventures in agreed ratio like
partnership.

6. As soon as the transaction is completed, the

agreement regarding the venture is automatically
over.

7. Accounting for Joint Venture is done on Liquidation

basis because Going Concern Assumption of
accounting is not appropriate for their joint venture
accounting.
1. JV are often found when each party can contribute in
different ways to the venture. Ex- One venturer may
contribute finance, another have marketing skills etc.

2. JV are formed to spread the risk involved.

3. When the services of all the co- venturers pooled

together, it would make the venturers highly
profitable.
 P.O.D Joint Venture Partnership
1. No. of No limit Limited to 20 in ordinary
Partners/Member business and 10 in banking
s business
2. Application of No Enactment Indian Partnership Act,1932
Act
3. Parties Involved Co-Ventures who carry Partners who carry business
business
4. Period & Temporary Partnership and Continuous, and does not
Continuity comes to an end after end even after completion
completion of particular of a particular task.
venture.

5. Accounting Liquidation basis Going Concern basis

6. Calculation of P & L is calculated at the end of P & L is calculated on
Profit / Loss specific Venture. Annual Basis.
Three different methods to keep records of joint venture :

First Method : Second Method : Third Method :

Recording of Recording of Recording of
transactions in transactions in transactions in
separate set book of one co- books of all co-
of books venturer. venturers
 Recording of transaction in separate set of books.

 In this method , a complete set of Double Entry books

is used for writing up JV transactions.

Accounting Treatment in this method is Similar to

that of Partnership Transactions.

This method is usually followed when the JV

undertaken is sufficiently large.
In this method, Separate Bank Account is Opened for the JV.
The co-venturers to a JV pay their share of investment in this
account and the payment on account of JV are also recorded in
this account.

Accounts of the co- venturers are also opened in the books.

When the joint venture is complete, the amount due to the co-
venturers are calculated & paid and books are thus closed.

 Three Accounts are Opened under this method:

a) Joint Venture Account
b) Joint Bank Account
c) Co- Venture Account
1. Joint Venture Account:-
 It’s a nominal account.
 Shows Profit or Loss made on the venture (prepared just like
trading and profit & loss account).
 Account is debited with goods purchased and expenses
incurred while it is credited with sales made.

Particulars Amount (Rs) Particulars Amount (Rs)

Expenses xx Incomes / Sales xx
Profit xx Loss xx
2. Joint Bank Account:-
 Amount contributed by each co- venturer is deposited in
this account and it is used to record all cash transactions of
the joint venture.
 On completion of JV, Joint Bank Account is closed by paying
the balance to co- venturer.

Particulars Amount (Rs) Particulars Amount (Rs)

Initial Contribution xx Material purchased xx
Sales xx Wages paid xx
Expenses paid xx
Drawings xx
Final Payment xx
3. Co- Venturer Account:-
 Personal Account in nature.
 Represents the amount due by or due to him.
 Credited with the amount of contribution made by him to
the joint funds and his share of profit.
 Debited with his share of loss and unsold stock taken over
by him. The balance reflects the amount due to or due from
each co-venturer.

Particulars Amount (Rs) Particulars Amount (Rs)

Stock taken xx Initial Contribution xx
Drawings xx Expense paid xx
Share of loss xx Share of Profit xx
Final Payment xx
 Journal Entries
Particulars

1. For amount contributed by Co- Joint Bank A/c Dr.

Venturers deposited by bank To Different Co-Venturers A/c
On Cash
Joint Venture A/c Dr.
To Joint Bank A/c
2. For Purchase of Goods on Account
of JV On Credit
Joint Venture A/c Dr.
To Suppliers’ Personal A/c

3. For Goods Supplied by a Co- Joint Venturer A/c Dr.

Venturer from his own Stock To Particular Co-Venturer A/c
Paid by Bank
Joint Venture A/c Dr.
4. For Expenses incurred on Joint To Joint Bank A/c
Venture Paid by Any Co-Venturer
Joint Venture A/c Dr.
To Particular Co-Venturer A/c
Particulars

Cash Sales
Joint Bank A/c Dr.
To Joint Venture A/c
On Credit
Debtors A/c Dr.
5. For goods sold on account of JV To Joint Venture A/c
Sales Proceeds taken by Co-Venturer
Particular Co-Venturer A/c Dr.
To Joint Venture A/c

6. For Unsold Goods taken by Co- Particular Co-Venturer A/c Dr.

Venturer To Joint Venture A/c
Profit - Joint Venture A/c Dr.
To Each Co-Venturer A/c
7. For Profit/Loss on Joint Venture
Loss - Each Co-Venturer A/c Dr.
To Joint Venture A/c
Particulars
For Payment Due to Co-Venturer

Particular Co-Venturer A/c Dr.

8. For settlement of final amount To Joint Bank A/c
due to (or from) Co-Venturers: For Payment Due from Co-Venturer

Joint Bank A/c Dr.

To Particular Co-Venturer A/c
Question