Definition, Explanation and Examples of Joint Venture:

Learning Objectives:

1. Define and explain the terms joint venture.

2. What the advantages or benefits of joint venture.

Definition:

A joint venture is a temporary partnership of two or more persons engaged in any particular business adventure of enterprise of short or seasonal duration.

Examples of Joint Venture:

It may be in connection with speculation in shares, underwriting of shares or debentures of new companies, or any other similar temporary or seasonal business enterprise. As the parties to a joint venture do business in union with others, they also share profit or loss between themselves in some agreed proportion.

Advantages of joint venture enterprise are that perhaps one party may buy goods at a much cheaper rate, but he has no capital; a second person may perhaps advance the requisite capital, but has no business acumen; while a third individual is a good salesman and can sell the goods readily at a good margin. In a case like this, it is advantageous for all the three to combine their energy and work for mutual gain.

You may also be interested in other articles from “accounting for joint venture” chapter:

1. Definition and Explanation of Joint Venture
2. Difference Between Joint Venture and Consignment
3. Advantages and Disadvantages of Joint Venture
4. Joint Venture Accounting – Journal Entries
5. Memorandum Joint Venture Account
6. General Questions and Answers About Joint Venture Accounting
7. Joint Venture Accounting Exercises and Problems

Other Related Accounting Articles:

• Joint Venture Accounting Questions and Answers
• Joint Venture Memorandum Account – An Alternative Method
• Joint Venture Accounting Exercises and Problems
• The Equity Method of Joint Venture Accounting
• Joint Venture Journal Entries
• Venture Capital
• Venture Capitalist
• Permanent Current Assets
• Open Ended Management Company
• Load Fund