Question

Long Answer Type Questions: Explain the features of joint venture.

Answer 1

A joint venture is when two or more parties come together to form a venture for a specific period to fulfill a specific task. The features of a joint venture are:

(a) Objective: Two or more parties come together to form a commercial enterprise for a specific period to fulfill a specific task or a project.

(b) Sharing of resources and expertise: The firms have an existing technical know-how as well as resources which can be shared while forming the venture.

(c) Control: The participating firms have a joint control over the Business administration and operations.

(d) Sharing of risks and profits: At the time of agreement the parties agree upon sharing the risks and profits that may result from the venture.

(d) Dissolution: Once the specific task or project is completed, the venture comes to an end and it is dissolved.

(e) Cash basis account: A joint venture always follows a cash basis of account.