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 … Continue reading
4 A joint arrangement is an arrangement of which two or more parties have joint
5 A joint arrangement has the following characteristics:
- The parties are bound by a contractual arrangement (see paragraphs B2–B4).
- 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.
7 Joint control is … Continue reading
Financial statements of parties to a joint arrangement
20 A joint
- its assets, including its share of any assets held jointly;
- its liabilities, including its share of any liabilities incurred jointly;
- its share of the revenue from the sale of the output
… Continue reading
26 In its separate financial statements, a joint operator or joint venturer shall account for its interest in:
- a joint operation in accordance with paragraphs 20–22;
- 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:
- a joint operation in accordance with paragraph 23;
- a joint venture
… Continue reading
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.
Contractual arrangement (paragraph 5)
B2 … Continue reading
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 … Continue reading
Financial statements of parties to a joint arrangement (paragraphs 21A–22)
Accounting for acquisitions of interests in joint operations
B33A When an entity acquires an interest in a joint operation in which the activity of the joint operation constitutes a business, as defined in IFRS 3, it shall apply, to the extent of its share in accordance with paragraph 20, all of the principles on business combinations accounting in IFRS 3, and other IFRSs, that do not conflict with the guidance … Continue reading
These examples accompany, but are not part of, IFRS 11. They illustrate aspects of IFRS 11 but are not intended to provide interpretative guidance.
IE1 These examples portray hypothetical situations illustrating the judgements that might be used when applying IFRS 11 in different 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.
Example 1 … Continue reading
Example 2 – Shopping centre operated jointly
IE9 Two real estate companies (the parties) set up a separate vehicle (entity X) for the purpose of acquiring and operating a shopping centre. The contractual arrangement between the parties establishes joint control of the activities that are conducted in entity X. The main feature of entity X’s legal form is that the entity, not the parties, has rights to the assets, and obligations for the liabilities, relating to the arrangement. These activities … Continue reading
Example 3 – Joint manufacturing and distribution of a product
IE14 Companies A and B (the parties) have set up a strategic and operating agreement (the framework agreement) in which they have agreed the terms according to which they will conduct the manufacturing and distribution of a product (product P) in different markets.
IE15 The parties have agreed to conduct manufacturing and distribution activities by establishing joint arrangements, as described below:
- Manufacturing activity: the parties have agreed to undertake the
… Continue reading