PFRS 11 JOINT ARRANGEMENTS

I. NATURE
PFRS 11 prescribes the principles for financial reporting by parties for a joint
arrangement. All parties to a joint arrangement shall apply PFRS 11.
Essential elements in the definition of joint arrangement:
a. Contractual arrangement
b. Joint control
PFRS 11 distinguishes between:
1. Parties that have joint control of a joint arrangement (referred to as joint
operators or joint venturers)
2. Parties that participate in, but do not have joint control of, a joint arrangement.

TYPES OF JOINT ARRANGEMENT

1. Joint operation
 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.
2. Joint venture
 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.

II. RECOGNITION

A. Contractual arrangements
The existence of the contractual agreement for sharing of joint control over an investee
distinguishes interests in joint arrangements from other investments, such as
investments in equity securities measured at fair value (PFRS 9), investment in
associate (PAS 28), and investment in subsidiary (PFRS 3 and PFRS 10). PFRS 11 is
not applicable in the absence of such agreement.
Evidence of contractual arrangement
a. The activity, duration and reporting obligations of the joint arrangement
b. The appointment of the board of directors or equivalent governing body of the
joint arrangement and the voting rights of the parties
c. Capital contributions by the parties
d. The sharing by the parties of the output, income, expenses or results of the joint
arrangement

B. Joint control
Joint control is the contractually agreed sharing of control of an arrangement, which
exist only when decisions about the relevant activities require the unanimous consent of
the parties sharing control.
III. MEASUREMENT
Nature of Interest in
Type of
relationship voting rights standard Accounting
investment
with investee of investee
Recognize own
assets,
liabilities,
income and
expenses plus
PFRS 11 and
share in the
Joint operation other relevant
Contractually assets,
Joint control PFRSs
agreed liabilities,
income and
expenses of
the joint
operation.
PFRS 11 and
Joint venture Equity method
PAS 28

IV. TRANSACTION

1. Acquisition of both the initial interest and additional interests in a joint operation
whose activity constitutes a business. If the acquisition of additional interest:
a. Does not result to control (i.e., the party merely retains joint control), the
previously held interest in the joint operation is not re-measured.
b. Results to control, the transaction is accounted for as a business
combination achieved in stages. Accordingly, the previously held interest
in the joint operation is re-measured in accordance with the principles of
PFRS 2.
2. Formation of a joint operation if an existing business is contributed to the joint
operation on its formation by one of the parties that participate in the joint
operation.

V. PRESENTATION
Investments accounted for under the equity method are presented as non-current
assets in the statement of financial position, except when they are classified as held for
sale in accordance with PFRS 5.