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Accounting
Joint Venture Accounting
The method of recording a company's share of assets, liabilities, revenues, and expenses in a jointly controlled arrangement.
Joint venture accounting follows IFRS 11 or equivalent standards. It can use proportionate consolidation (line-by-line sharing) or the equity method (showing only the net investment). Clear agreements on contributions and profit sharing are essential to avoid disputes.
It's splitting the restaurant bill fairly when you and your friend went halves on everything.
Real world: Two companies form a joint venture to develop a new app. Each records 50% of the venture's revenue, costs, assets, and liabilities in their own accounts (proportionate consolidation or equity method, depending on the rules).
💡 Joint venture accounting ensures each partner only reports their fair share of the shared project.