IFRS 11 Joint Arrangements Archives – FAQ | IFRS

IFRS 11 Objective and Scope

Objective

1 The objective of this IFRS is to establish principles for financial reporting by entities that have an interest in arrangements that are controlled jointly (ie joint arrangements).

Meeting the objective

2 To meet the objective in paragraph 1, this IFRS defines joint control and requires an entity that is a party to a joint arrangement to determine the type of joint arrangement in which it is involved by assessing its rights and obligations and to account for those rights and obligations in accordance with that type of joint arrangement.

Scope

3 This IFRS shall be applied by all entities that are a party to a joint arrangement.Read more

IFRS 11 Joint arrangements

Joint arrangements

4 A joint arrangement is an arrangement of which two or more parties have joint control.

5 A joint arrangement has the following characteristics:

  1. The parties are bound by a contractual arrangement (see paragraphs B2–B4).
  2. The contractual arrangement gives two or more of those parties joint control of the arrangement (see paragraphs 7–13).

6 A joint arrangement is either a joint operation or a joint venture.

Joint control

7 Joint control is 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.

8 An entity that is a party to an arrangement shall assess whether the contractual arrangement gives all the Read more

IFRS 11 Joint arrangements inclusion in Financial Statements

Financial statements of parties to a joint arrangement

Joint operations

20 A joint operator shall recognise 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.

21 A joint operator shall account for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the IFRSs applicable to the particular assets, liabilities, revenues Read more

IFRS 11 Separate financial statements

26 In its separate financial statements, a joint operator or joint venturer shall account for its interest in:

  1. a joint operation in accordance with paragraphs 20–22;
  2. a joint venture in accordance with paragraph 10 of IAS 27 Separate Financial Statements.

27 In its separate financial statements, a party that participates in, but does not have joint control of, a joint arrangement shall account for its interest in:

  1. a joint operation in accordance with paragraph 23;
  2. a joint venture in accordance with IFRS 9, unless the entity has significant influence over the joint venture, in which case it shall apply paragraph 10 of IAS 27 (as amended in 2011).
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IFRS 11 Joint arrangements

Appendix B Application guidance

This appendix is an integral part of the IFRS. It describes the application of paragraphs 1–27 and has the same authority as the other parts of the IFRS.

B1 The examples in this appendix portray hypothetical situations. Although some aspects of the examples may be present in actual fact patterns, all relevant facts and circumstances of a particular fact pattern would need to be evaluated when applying IFRS 11.

Joint arrangements

Contractual arrangement (paragraph 5)

B2 Contractual arrangements can be evidenced in several ways. An enforceable contractual arrangement is often, but not always, in writing, usually in the form of a contract or documented discussions between the parties. Statutory mechanisms can also create enforceable arrangements, either Read more

IFRS 11 Types of Joint arrangements

Types of joint arrangement (paragraphs 14–19)

B12 Joint arrangements are established for a variety of purposes (eg as a way for parties to share costs and risks, or as a way to provide the parties with access to new technology or new markets), and can be established using different structures and legal forms.

B13 Some arrangements do not require the activity that is the subject of the arrangement to be undertaken in a separate vehicle. However, other arrangements involve the establishment of a separate vehicle.

B14 The classification of joint arrangements required by this IFRS depends upon the parties’ rights and obligations arising from the arrangement in the normal course of business. This IFRS classifies joint arrangements as either joint Read more