Midstream Ltd and Delta Ltd Enter into a Business Undertaking

question 1

Multiple Choice

Midstream Ltd and Delta Ltd enter into a business undertaking to lease a 100-hectare vineyard from Pinot Ltd.There is a contractual agreement between the two companies whereby they share control and must agree on all strategic financial and operating decisions.The two companies appoint Todman Management Pty Ltd as the vineyard manager.A separate set of accounting databases is established for the undertaking and each investor contributes cash capital to the undertaking.The intention of the investing companies is to market the produce of the vineyard and make a profit.The business undertaking is:

• A) a joint venture operation because the investors have agreed to a sharing of control.
• B) a joint venture entity because it has been established to operate the vineyard with the intention of making a profit.
• C) a simple partnership in which two companies operate as partners in a business undertaking.
• D) none of the above.

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Definitions:

Ounce

A unit of weight in the U.S. customary and British imperial systems, equal to 1/16 of a pound.

Milligrams

A metric unit of mass equal to one thousandth of a gram, commonly used to measure small quantities of substances.

Kilograms

A metric unit of mass equal to 1000 grams.

Ounces

A unit of weight in the avoirdupois system, equal to 1/16 of a pound or approximately 28.35 grams.