Joint Arrangement Concepts Summary 2

Joint Arrangement Concepts ACCO 30023 – STUDY MATERIAL & NOTES
AUGUST 2021


Accounting for Joint Operations

A joint operator recognizes in relation to its interest in a joint operation:

Its assets, including its share of any assets held jointly
Its liabilities, including its share of any liabilities incurred jointly
Its revenue from the sale of its share of the output of the JO Line by Line
Its share of the revenue from the sale of the output by the JO Consolidation
Its expenses, including its share of any expenses incurred jointly


Accounting for Joint Venture

➢ Equity Method



Requirements for Joint operations – No separate vehicle

1. Determine net income of joint operator A
2. Determine net income of joint operator B

Given

➢ Jointly contracted by the government to deliver a A B
waterway in return for 39.2 M Revenue 19.6M 19.6M
➢ Revenue to be shared equally
Cost 11.2M 16.8M
➢ JO A had separate cost of 11.2 M
➢ JO A had separate cost of 16.8M NI 8.4M 2.8M



Requirements for Joint operations –with separate vehicle

1. Journal entries in the books of a JO
2. JO’s share in net income
Capital 300,000
Share in PPE 60%
Share in CA 50%
Share in Liability 75%
Share of revenue 55%
Share of expenses 60%