Features of Joint Venture
- There is an agreement between two or more persons for a single venture
- A joint venture comes to an end on completion of a specific venture
- Co-ventures share profits and losses in agreed proportion
- Since a joint venture is for a single venture, generally no firm name is used
- There will be no closing stock as it will be either sold or taken away by any of the venturers at the end of the venture
- Generally profit/loss of the venture is computed on completion of the venture
- Going concern assumption of accounting is not appropriate for joint venture accounting. The problem of distinction between capital and revenue expenditure does not arise.
- Plant and machinery and other fixed assets, when used in a venture, are first charged to Venture account at cost. On completion of the venture, such assets are re-valued and shown as the revenue of the venture. Thus, the accounting approach for measurement of venture profit is totally different.
- Joint venture follows cash basis of accounting.