BU487 Chapter Notes - Chapter 9: Joint Venture
Document Summary
Special-purpose entities (spe) entity created to accomplish a very specific business activity, and to. Avoid the consolidation of the spe with the sponsoring enterprise. Joint arrangements where two or more parties with common interests enter into a contract to do business together on a venture basis. Joint operations each venture contributes the use of assets or resources to the new activity under the joint arrangement. Joint venture a separate entity is formed to conduct the new activity, to which each venture contributes assets and resources to the entity. Joint operations - contributing equipment: example: company a contributed equipment worth fv ,000, cv ,000, 10 years useful life, and enjoys 30% interest, dr. joint operation ,000 and cr. Equipment ,000 and gain ,500 and unrealized gain ,500: 30% * ,000 = ,500, 70% * ,000 = ,500, t = 1 = dr. unrealized gain and cr. Amortization expense : ,500/10 years = .
