USA Capitalizing Joint Venture Web Development

[Accounting201]

Hi All,

I'm curious how GAAP would have us treat the following scenario:

Company A is in the process of developing a website alongside Company B, a related party. Company A will provide site content and branding, Company B will manage transactions/fulfilment, post sales, provide customer service and manage customer retention.

A third party will also be employed to complete SEO work for 3-5 months, for a fee.

I feel comfortable recognizing which expenses related to this project can be capitalized -- however, I'm uncertain whether this should be on Company A's balance sheet, Company B's, or both!

Any help and logic behind your conclusion would be greatly appreciated.

 

[Fidget]

By the sounds of it, under IFRS it would probably be each participant accounting for its own share of the assets/liabilities. US GAAP doesn't appear to have a standard that formally addresses the issue. But this comparison between IFRS/US GAAP on joint ventures from pwc might help you:

12.9 Joint arrangements (pwc.com)