joint venture formation

Broad Transactions1

1. 805-60Joint Venture Formations805 Business Combinations

   ASC 805-60 governs how a newly formed joint venture (or corporate joint venture) accounts for its own formation in its separate financial statements. The joint venture must establish a new basis of accounting at the formation date, recognizing and measuring identifiable assets, liabilities, and any noncontrolling interest under Subtopic 805-20, but without identifying an acquirer. Goodwill, if any, is the excess of the formation-date fair value of the joint venture as a whole over the net of the identifiable assets and liabilities recognized; any excess of net assets over that fair value is credited to additional paid-in capital rather than recognized as a bargain purchase gain.