Midstream Ltd and Delta Ltd Enter into a Business Undertaking

question 39

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 and holds the assets as tenants in common.Each of the investing companies enters into a separate agreement with the vineyard manager to sell the produce of the vineyard in the market on their behalf.The business undertaking is:

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

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Definitions:

Regular Hourly Rate

The fixed amount of money that an employee is paid for each hour of work.

Overtime

Working hours that exceed the standard work hours defined by labor laws or agreements.

Solve

The process of finding an answer or explanation for a problem or question.

Drapery Store

A retail establishment that specializes in selling cloth and other materials for windows and home decoration.