With reference to IAS 31 (Interests in Joint Ventures), explain the three types of joint ventures.

With reference to IAS 31 (Interests in Joint Ventures), explain the three types of joint ventures.

1. Jointly controlled operations.
These are ventures where the assets and resources of the individual ventures are used. If a joint venture was established by three ventures to construct a spacecraft with one manufacturing the shell and furbishing the interior, the second the engines and the third the computer hardware and software, and each carried out the work alongside its normal activities using its own employees and incurring its own expenses and liabilities, this would be regarded as a jointly controlled operation.

2. Jointly controlled assets.
These occur when venturers jointly own and control specific assets for the purpose of a joint venture. For example, if two ventures acquired a furbished castle and rented out rooms in the castle, each venture receiving rents and bearing expenses, this would be regard as a joint venture with jointly controlled assets.

3. Jointly controlled entities.
This is where a distinct entity is formed in which each venturer has an interest. A common example is when two enterprises combine their activities in a particular line of business by transferring the relevant assets and liabilities into a jointly controlled entity. Another example arises when an enterprise commences a business in a foreign country in conjunction with the government or other agency in that country, by establishing a separate entity, which is jointly controlled by enterprise and the government or agency.

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marto answered the question on February 13, 2019 at 09:23

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