Joint venture:

A joint venture takes place when two parties come together to take on one project. In a joint venture, both parties are equally invested in the project in terms of money, time, and effort to build on the original concept.

Advantages Joint Venture:

Provide companies with the opportunity to gain new capacity and expertise Allow companies to enter related businesses or new geographic markets or gain new technological knowledge access to greater resources, including specialized staff and technology sharing of risks with a venture partner In the era of divestiture and consolidation, JVs offer a creative way for companies to exit from non-core businesses.

Disadvantages Joint Venture:

The objectives of the venture are not 100 per cent clear and communicated to everyone involved. There is an imbalance in levels of expertise, investment or assets brought into the venture by the different partners. Different cultures and management styles result in poor integration and co-operation. The partners don't provide enough leadership and support in the early stages. Success in a joint venture depends on thorough research and analysis of the objectives

Example of joint ventures:

Pakistan state oil and pizza huts joint venture.

Indus motor company is a joint venture of house of habib.

Amalgamation:
Amalgamation or amalgam, when used to refer to a fictional character or place, refers to one that was created by combining, or is perceived to be a combination, of several other previously existing characters or locations. To emphasize the origin of their creations, authors or artists may use amalgamated names.

Examples:
Mega City (The Matrix) The City Desk

Absorption:
It is the process in which one existing company takes over the other existing company and merges together as a single unit.

Examples:
Chillers and Heat Pumps

Reconstruction:
If any company is suffering loss and it closes its business and joins with or without other company, it creates new company. That is called reconstruction.

Valuation of Goodwill:
There are three methods of valuation of goodwill of the firm; 1. Average Profits Method 2. Super Profits Method 3. Capitalization Method

Average Profits Method:

Under this method goodwill is calculated on the basis of the average of some agreed number of past years. The average is then multiplied by the agreed number of years. This is the simplest and the most commonly used method of the valuation of goodwill. Goodwill = Average Profits X Number of years of Purchase

Super profits method:

Under this method Goodwill is calculated on the basis of Super Profits i.e. the excess of actual profits over the average profits. For calculating Goodwill:i) Normal Profits = Capital Invested X Normal rate of return/100 ii) Super Profits = Actual Profits - Normal Profits iii) Goodwill = Super Profits x No. of years purchased

Capitalization Method:
There are two ways of calculating Goodwill under this method:
(i) (ii)

Capitalization of Average Profits Method, Capitalization of Super Profits,