IFRS 11 Joint Arrangements |

Consolidated subsidiaries, joint operations and other entities || Investments in joint ventures, associates and structured entities

IFRS 12 provides one comprehensive disclosure standard for equity instruments in Subsidiaries, Joint arrangements (Joint operations and Joint ventures), Associates and Structured entities. Hence, management needs to exercise a certain degree of judgement in determining whether a new investee is controlled and therefore consolidated. For instance, disclosure and internal documentation is required for how voting rights are evaluated and whether it is a principal or an agent etc.

Classifying these equity instruments requires time, effort and the exercise of considerable judgement based on a comprehensive understanding of the business, operations, and legal rights and obligations the investing entity has obtained in the investee. Also these judgements have to be re-assessed during any significant financial close. This is a true collaboration … Read more

Joint arrangements rights and obligations

Focus on the nature of the joint arrangements rights and obligations

A joint arrangement can either be a joint operation or a joint venture under IFRS 11. In determining the classification of joint arrangements, the existence of a separate vehicle is a necessary condition, but not sufficient for a joint arrangement to be considered a joint venture. IFRS 11 clarifies that other factors like terms of the contractual arrangement and relevant facts and circumstances are to be considered as well.

Joint arrangements rights and obligations

Jointly-controlled entities, as previously defined in IAS 31 , may be classified as joint ventures and hence accounted for using the equity method in IFRS 11. The choice of using proportionate consolidation has been removed under IFRS 11. The impact … Read more

Joint Arrangements

IFRS 11 describes the accounting for joint arrangements. 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. The accounting treatment required will depend on the substance of the arrangement and the nature of the investor’s interest in it. The option to apply proportionate consolidation has been removed. IFRS 11 supersedes the requirements relating to joint ventures in IAS 31 and SIC 13.

A joint arrangement is an arrangement of which two or more parties have joint control and the following characteristics are present:

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