A joint venture company will be purchasing equipment and my company has agreed to contribute to the purchase cost of these assets but we will have no ownership nor ongoing maintenance obligations in regards to these assets.
How do we treat this cost in our books?
thanks
Part of that answer lies in how the joint venture company will record the contribution in their books:
a) Capital
b) Loan
c) Intercompany current account
What ever they do, you do the matching equivalent
a) Investment
b) Advance
c) Intercompany current account
Thanks a lot . makes sense.
How about if the receiving party is not related at all?
and the sum to contribute is huge ~5ook plus
Same principle applies - the transactions in each parties accounts have to have matching status, except you wouldn’t have Intercompany current account as they are not related.