To mark this momentous year for UK GAAP, I'm embarking on a mission to work my way through FRS 102, reading a portion on each working day of 2015 and writing a short blog entry on my thoughts and musings (be they few or many).
Day 55 (5 May)
On Friday I considered the various types of joint venture defined in section 15 and the Glossary. Let's look at how jointly controlled operations (JCOs) are accounted for.
To recap, a JCO is not an entity in its own right. Instead it is a project which is funded and run by the venturers, using their own assets and resources (including inventory and PPE) and incurring their own expenses and liabilities. The project is a revenue centre and this revenue is then shared out between the venturers in some equitable way.
So a key difference between a JCO and a JCE (an entity) or a JCA (a jointly controlled asset) is that there is no actual sharing of assets and resources. Therefore, as would seem common sense, each venturer accounts for their own stuff (assets and liabilities, to be more precise) and their share of the revenue.
Hurrah for a bit of street logic! If only every bit of accounting made this much sense...
P.S. If you missed the last instalment click here