International joint ventures...?

Question

... What has transaction costs got to do with it?

Answer 1

Joint Venture: The cooperation of two or more individuals or businesses--each agreeing to share profit, loss and control--in a specific enterprise.

In Joint Ventures different companies get together but for investment (and profits) they keep separates accounts. When the Joint Venture spends money different transactions are paid by different companies accounts: from here the cost code allocations for different transactions depending who is paying for what. The profit is usually divided proportionally the investment and also distributed into different company accounts.

The subject, which covers all this is called: JVA  - Joint Venture Accountancy.

“This is a good way for companies to partner without having to merge. JVs are typically taxed as a partnership.”

Answer 2

exchange rates and federal fees.