Joint Venture Accounting Key Concept

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Joint Venture

 -A partnership formed to minimize the risk in business undertakings that may involve extensive capital investment and long payback period

 Joint Operating Agreement

 -Contract that governs the rights and obligations of the involved partners and their participating interests in the Joint Venture

 Cash Call

 -    Amount of money requested by the operator of the Joint Venture from the Partners to pay for the expected expenditures and working capital for day to day operations of the Venture

 Cutback

 -Month-end activity executed to provide the operator share net balance of expenditure and working capital

 -It is done to provide data for biling non-operator JV partners

 Equity Change Management

      Is a process to reconciles ownership changes, by reassigning records to equity group that owns the venture at the end of the period. The process is divide into two:

 •Pre-cutback equity change management (before cutback)

 •Prior period equity adjustment (after cutback)




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