What are joint ventures and associates?

Question

Accepted Answer

Joint venture and associates are two types of business arrangements where companies collaborate and share resources.

Joint venture is a partnership between two or more companies to undertake a specific project or business activity.
Associates are companies in which another company holds a significant but not controlling interest.
Joint ventures involve sharing of profits, losses, and control between the participating companies.
Associates are accounted for using the equity method, where the investment is initially recorded at cost and adjusted for the investor's share of the associate's profits or losses.
Examples of joint ventures include Sony Ericsson (Sony and Ericsson) and Hulu (Disney, NBCUniversal, and Fox).
Examples of associates include Toyota's stake in Subaru and Coca-Cola's investment in Monster Beverage Corporation.

Accepted Answer

Difference between associate and Joint venture

Associate is when a company invest in any other company and holds share in that company between 20 to 50 percentage, the investee company is called associate of investor (co who is investing)

While joint venture is that when any 2 companies comes together to form new entity either for exploiting distribution channel, manufacturing or provide services and share percentage of share holding in proportion to their joint investment in that entity.

What are joint ventures and associates?

Accentuate IT Solutions Financial Controller interview questions & answers

Popular interview questions of Financial Controller