Question

Creative Concepts Co. and Retail Investment Inc., form a joint venture to purchase and sell high-end real estate to foreign buyers. Creative Concepts contributes $400,000 in capital, and Retail Investment contributes $600,000 in capital. The first year resulted in $2,000,000 in profits. Unless otherwise agreed, joint venturers: a. retain profits with the joint venture until the joint venture is dissolved by at least one member. b. share profits and losses equally. c. share profits and losses according to the state's Uniform Joint Venture Act. d. share profits and losses by proportion to the amount invested

Answer 1

share profits and losses equally.

Step-by-step explanation:

Joint venture is defined as a contractual agreement between two or more parties to pool their resources together to achieve a common goal. There is no transfer of ownership on the agreement.

The profits are usually shared equally regardless of the capital contribution by each party.

However if there was an agreement on how profit was to be shared it will result in unequal sharing of profit.

So despite difference in capital contribution between Creative Concepts and Retail Investment, the profit realised will be shared equally.