Some proposed changes to the joint venture accounting-2007-2008
The suggestions in ED 157/ED 9 may seem less extraordinary, with the major change consisting the elimination of option to be able to merge interests in some of the jointly restricted entities.
This accounting alert provides an overview of exposure drafts the major issues that arise which will cover some of the basic topics and they include.

• The substantial emphasis’s on legal form for the joint ventures and the arrangements. – this will be used instead of placing much emphasis on substance arrangement
• To be able to change the way the concept of joint controlled has been applied. –this will be in the relation to operations and joint ventures
• The illustrative guideline which will include examples that will have many different ways of accounting that will kit be followed by the Australian entities.- specially the gas and oil mining companies.
• Expand the disclosure requirements surrounding joint ventures as well as the subsidiaries and the associates.
• De-emphasis of the legal form of joint venture arrangements

All-purpose principles
The experience draft suggests that the forms of arrangement should not be very significant in determining the best accounting arrangement. The joint ventures will be aligned closely and form the basis of the legal structures agreements.

Types of joint arrangements
The following is a summary of the three forms that have been contemplated by the 157/ED9 :-
Joint operation
Characteristics
It will involve the use of assets and other basic resources mainly in the sell and manufacture joint product.
Ownership of assets
Every party will own its assets that will be used to create the overall joint products
Summary of accounting
It will recognize all the assets they are controlled and the expenses as well as the liabilities incurred.

Joint asset
Characteristics
Every party will be able to take a share of all the outputs form the assets and have agreed to share all the costs that have been incurred in the whole operation.
Ownership of assets
Every party has the opportunity to have joint ownership of al the assets that have been used to generate the overall out put.
Summary of accounting
It will be able to recognize all the assets and classify them according to tier nature and all the revenues that it has incurred.

Joint venture
Characteristics
It is overall controlled by the venture and entitled to share effectively based on the outcome of the venture
Ownership of assets
They do not have the right to individual obligations for all the expenses involved in the venture.
Summary of the accounting
The joint venture is recognized using the equity method unless where exemption applies.