Joint Arrangements (IFRS 11)

8/3/2019 Joint Arrangements (IFRS 11)

1/14

Joint Arrangements(IFRS 11)International Financial Reporting StandardsProf. Dr. Manfred Bolin

Akash Chaudhary|Amit Kumar Shaw


2/14

Agenda

Core Principle

Joint Arrangements

Joint Control

Types of Joint Arrangements Financial Statements of parties

Separate financial Statement

Applicability and early adoption


3/14

Core principle

History of IFRS 11

A party to a joint arrangement determines the

type of joint arrangement in which it is involved

by assessing its rights and obligations and

accounts for those rights and obligations inaccordance with that type of joint arrangement.

[IFRS 11:1-2]

November 2004 Project on joint arrangements added to the IASB's agenda

13 Sept 2007 ED 9 Joint Arrangements published

12 May 2011 IFRS 11 Joint Arrangements published

1 January 2013 Effective date of IFRS 11


4/14

Joint Arrangements

A joint arrangement is an arrangement of which two or

more parties have joint control. [IFRS 11:4]

Characteristics: [IFRS 11:5] the parties are bound by a contractual arrangement, and

the contractual arrangement gives two or more of those parties joint

control of the arrangement.

A joint arrangement is either a joint operation or a jointventure. [IFRS 11:6]


5/14

JointControl

Exists only when decisions about the relevant activities

require the unanimous consent of the parties sharing control.

[IFRS 11:7]

An entity first assesses whether the parties, or a group of the

parties, control the arrangement

Secondly, an entity shall assess whether it has joint control of

the arrangement

Can prevent any of the other parties, or a group of the parties,

from making unilateral decisions. [IFRS 11:B9]


6/14


7/14


8/14

Types of Joint Arrangements

Ajoint operation is a joint arrangement whereby the

parties that have joint control of the arrangement have

rights to the assets, and obligations for the liabilities,

relating to the arrangement. Those parties are called

joint operators. [IFRS 11:15]

Ajoint venture is a joint arrangement whereby the

parties that have joint control of the arrangement have

rights to the net assets of the arrangement. Those

parties are called joint venturers. [IFRS 11:16]


9/14


10/14

Financial Statements of parties to a

joint arrangementJoint operations

A joint operator recognises in relation to its interest in a joint

operation: [IFRS 11:20]

its assets, including its share of any assets held jointly;

its liabilities, including its share of any liabilities incurred jointly;

its revenue from the sale of its share of the output of the joint

operation;

its share of the revenue from the sale of the output by the joint

operation; and

its expenses, including its share of any expenses incurred jointly.


11/14

Joint ventures

A joint venturer recognises 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 as specified in that standard.

[IFRS 11:24]

A party that participates in, but does not have joint control of,

a joint venture accounts for its interest in the arrangement in

accordance with IFRS 9 FinancialInstruments unless it has

significant influence over the joint venture, in which case it

accounts for it in accordance with IAS 28 (as amended in

2011). [IFRS 11:25]


12/14

Separate Financial Statements

Depends on the involvement of the entity in that jointarrangement and the type of the joint arrangement:

If the entity is a joint operator or joint venturer it shall accountfor its interest in

a joint operation in accordance with paragraphs 20-22; a joint venture in accordance with paragraph 10 of IAS

27 SeparateFinancial Statements. [IFRS 11:26]

If the entity is a party that participates in, but does not havejoint control of, a joint arrangement shall account for its

interest in: a joint operation in accordance with paragraphs 23;

a joint venture in accordance with IFRS 9, unless the entity hassignificant influence over the joint venture, in which case it shallapply paragraph 10 of IAS 27 (as amended in 2011). [IFRS 11:27]


13/14

Applicability and Early

Adoption IFRS 11 is applicable to annual reporting periods beginning onor after 1 January 2013. [IFRS 11:AppendixC1]

An entity may apply IFRS 11 to an earlier accounting period,

but if doing so it must disclose the fact that is has early

adopted the standard and also apply: [IFRS 11.AppendixC1]

IFRS 10 ConsolidatedFinancial Statements

IFRS 12 Disclosure ofInterests in Other Entities

IAS 27 SeparateFinancial Statements (as amended in 2011)

IAS 28 Investments in Associates and Joint Ventures (asamended in 2011).


14/14

Thank You

Documents

Joint Arrangements (IFRS 11)