Difference Between Joint Venture and Consignment:

Learning Objectives:

1. What is the difference between joint ventures and consignment?

Parties:

In joint venture, parties to the agreement are known as co-venturers while in consignment they are termed as consignor and consignee.

Compensation:

Co-venturers are the partners in the venture and share profits or losses of the venture. Where as consignee is never a partner. Consignee gets his commission for acting as an agent for consignor.

Relation:

Each co-venturer is a partner as well as the agent of other co-venturers. Where as consignee is the agent of his principle i.e., consignor.

Termination:

Relationship of co-venturers comes to an end when venture is completed. Where as relationship of consignor and consignee continues until terminated by parties.

Investment:

Co-venturers, usually, contribute towards the capital of the venture (in the form of money or materials) but consignee does not contribute towards the capital.

Rights:

Co-venturers enjoy equal rights as partners but consignee only acts as an agent.

Ownership:

Co-venturers are the owners of their venture but in consignment the consignor is the owner not the consignee.

Account Sales:

Consignee is required to send account sales to consignor. Co-venturers exchange the relevant information. No regular reports are submitted.

You may also be interested in other articles from “accounting for joint venture” chapter:

1. Definition and Explanation of Joint Venture
2. Difference Between Joint Venture and Consignment
3. Advantages and Disadvantages of Joint Venture
4. Joint Venture Accounting – Journal Entries
5. Memorandum Joint Venture Account
6. General Questions and Answers About Joint Venture Accounting
7. Joint Venture Accounting Exercises and Problems