IFRS 11 Joint Arrangements
Party to a joint arrangement -
- An entity that participates in a joint arrangement, regardless of whether that entity has joint control of the arrangement.
A joint operator is required to recognize in relation to its interest in a joint operation:
1. Its assets, including its share of any assets held jointly; 2. Its liabilities, including its share of any liabilities incurred jointly; 3. Its revenue from the sale of its share of the output arising from the joint operation; 4. Its share of the revenue from the sale of the output by the joint operation; and 5. Its expenses, including its share of any expenses incurred jointly.
Types and classification of a joint arrangement
1. Structure of the joint arrangement. 2. When structured through a separate vehicle: 2..1. The legal form of the separate vehicle; 2.2 Terms agreed by the parties in the contractual arrangement; and 2.3 When relevant, other facts and circumstances.
Defined terms-Joint arrangement -
A joint arrangement is an arrangement of which two or more parties have joint control and the following characteristics are present: The parties are bound by a contractual arrangement; and The contractual arrangement gives two or more of the parties joint control of the arrangement.
Joint venture
A joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.
Joint ventures
A joint venturer is required to recognize its interest in a joint venture as an investment and shall account for that investment using the equity method in accordance with IAS 28 Investments in Associates and Joint Ventures unless the entity is exempted from applying the equity method.
Joint operator
A party to a joint operation that has joint control of that joint operation.
Joint venturer -
A party to a joint venture that has joint control of that joint venture
Separate vehicle
A separately identifiable financial structure, including separate legal entities or entities recognised by statute, regardless of whether those entities have a legal personality
In conclusion
As the classification of a joint arrangement requires assessment of the substance of an investor's interest including consideration of related contractual arrangements and other facts and circumstances, this is expected to be an area of judgement requiring careful consideration.
Judgement will need to be exercised when making this classification.
In arriving at the classification, the parties' rights and obligations arising from the arrangement in the normal course of business must be assessed. In making this assessment
Joint control
The contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. Joint operation - A joint arrangement whereby the parties that have joint control of the arrangeme
IFRS 11 describes the accounting for a joint arrangement.
The investor will be required to either apply the equity method of accounting or recognize, on a line-by-line basis, its share of the underlying assets, liabilities, revenues and expenses. T
IFRS 11 Joint Arrangements
To establish principles for financial reporting by entities that have an interest in arrangements that are controlled jointly (i.e. joint arrangements).
