| Budget Amount *help |
¥1,900,000 (Direct Cost: ¥1,900,000)
Fiscal Year 2005: ¥900,000 (Direct Cost: ¥900,000)
Fiscal Year 2004: ¥1,000,000 (Direct Cost: ¥1,000,000)
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| Research Abstract |
In spite of the increasing number and economic importance of corporate joint ventures in the world-wide business activities, there still exists no globally recognized accounting standards for their formation and consolidation, except for IAS31, which requires the proportionate consolidation method to be mainly used, and allows also the equity method as the alternative.
The Business Combination Accounting Standard, which is applicable in Japan from April 2006, has ruled out the application of the equity method, mainly in consideration of convergence with the concerned US Standard.
This paper finds the main reason of this uniformity and for the lack of consensus concerning to the "joint control" concept, and makes clear the difference with investments in associates by the terms and conditions of JV agreements.
The accounting of their formations, however, are not easy to confine into one method because of the variety of their forms ; some are consist of the split-off of the partners' existing business segments, and others are the start-up of new business or projects or the counter-purchases of partner's technology or R&D.
In the consolidation accounting of JV, the equity method, which is normally applied in Japan, conceals a JV partner's really responsible assets and liabilities position.
The alternative proportionate consolidation method is recommendable, also to the management accounting, even if it were not institutionally approved.
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