International Financial Reporting

Standard 11
Joint Arrangements

International Financial Reporting

Standard 11

Joint Arrangements
Objective
1 Th e objective of th is IF RS is to establish prin ciples for fin an cial reportin g by
en tities th at h ave an in terest in arran gemen ts th at are con trolled join tly (ie join t
arran gemen ts) .

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 Th is IF RS sh all be applied by all en tities th at are a party to a join t arran gemen t.

Joint arrangements
4 A join t arran gemen t is an arran gemen t of wh ich two or more parties h ave join t
con trol.

5 A join t arran gemen t h as th e followin g ch aracteristics:

(a) Th e parties are bou n d by a con tractu al arran gemen t (see paragraph s B2–
B4) .
(b) Th e con tractu al arran gemen t gives two or more of th ose parties join t con trol
of th e arran gemen t (see paragraph s 7–13) .
6 A join t arran gemen t is eith er a join t operation or a join t ven tu re.

Joint control
7 Join t con trol is th e con tractu ally agreed sh arin g of con trol of an arran gemen t,
wh ich exists on ly wh en decision s abou t th e relevan t activities requ ire th e
u n an imou s con sen t of th e parties sh arin g con trol.

8 An entity that is a party to an arrangement shall assess whether the contractual arrangement
gives all the parties, or a group of the parties, control of the arrangement collectively. All the
parties, or a group of the parties, control the arrangement collectively when they must act
together to direct the activities that significantly affect the returns of the arrangement (ie the
relevant activities).

9 Once it has been determined that all the parties, or a group of the parties, control the
arrangement collectively, joint control exists only when decisions about the relevant activities
require the unanimous consent of the parties that control the arrangement collectively.

10 In a joint arrangement, no single party controls the arrangement on its own. A party with joint
control of an arrangement can prevent any of the other parties, or a group of the parties, from
controlling the arrangement.

11 An arrangement can be a joint arrangement even though not all of its parties have joint control
of the arrangement. This IFRS distinguishes between parties that have joint control of a joint
arrangement (joint operators or joint venturers) and parties that participate in, but do not have
joint control of, a joint arrangement.

12 An entity will need to apply judgement when assessing whether all the parties, or a group of the
parties, have joint control of an arrangement. An entity shall make this assessment by
considering all facts and circumstances (see paragraphs B5–B11).

13 If facts and circumstances change, an entity shall reassess whether it still has joint control of the
arrangement.

Types of joint arrangement

14 An en tity sh all determin e th e type of join t arran gemen t in wh ich it is in volved. Th e
classification of a join t arran gemen t as a join t operation or a join t ven tu re depen ds
u pon th e righ ts an d obligation s of th e parties to th e arran gemen t.

15 A join t operation is a join t arran gemen t wh ereby th e parties th at h ave join t con trol
of th e arran gemen t h ave righ ts to th e assets, an d obligation s for th e liabilities,
relatin g to th e arran gemen t. Th ose parties are called join t operators.

16 A join t ven tu re is a join t arran gemen t wh ereby th e parties th at h ave join t con trol of
th e arran gemen t h ave righ ts to th e n et assets of th e arran gemen t. Th ose parties
are called join t ven tu rers.

17 An entity applies judgement when assessing whether a joint arrangement is a joint operation or
a joint venture. An entity shall determine the type of joint arrangement in which it is involved by
considering its rights and obligations arising from the arrangement. An entity assesses its rights
 and obligations by considering the structure and legal form of the arrangement, the terms
agreed by the parties in the contractual arrangement and, when relevant, other facts and
circumstances (see paragraphs B12–B33).

18 Sometimes the parties are bound by a framework agreement that sets up the general contractual
terms for undertaking one or more activities. The framework agreement might set out that the
parties establish different joint arrangements to deal with specific activities that form part of the
agreement. Even though those joint arrangements are related to the same framework
agreement, their type might be different if the parties’ rights and obligations differ when
undertaking the different activities dealt with in the framework agreement. Consequently, joint
operations and joint ventures can coexist when the parties undertake different activities that form
part of the same framework agreement.

19 If facts and circumstances change, an entity shall reassess whether the type of joint
arrangement in which it is involved has changed.

Financial statements of parties to a joint arrangement

Joint operations
20 A join t operator sh all recogn ise in relation to its in terest in a join t operation :
(a) its assets, in clu din g its sh are of an y assets h eld join tly;
(b) its liabilities, in clu din g its sh are of an y liabilities in cu rred join tly;
(c) its reven u e from th e sale of its sh are of th e ou tpu t arisin g from th e join t
operation ;
(d) its sh are of th e reven u e from th e sale of th e ou tpu t by th e join t operation ;
an d
(e) its expen ses, in clu din g its sh are of an y expen ses in cu rred join tly.

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 and expenses.

21A 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 Business Combinations, 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 in
this IFRS and disclose the information that is required in those IFRSs in relation to business
combinations. This applies to the acquisition of both the initial interest and additional interests
in a joint operation in which the activity of the joint operation constitutes a business. The
accounting for the acquisition of an interest in such a joint operation is specified in
paragraphs B33A–B33D.

22 The accounting for transactions such as the sale, contribution or purchase of assets between
an entity and a joint operation in which it is a joint operator is specified in paragraphs B34–B37.

23 A party that participates in, but does not have joint control of, a joint operation shall also
account for its interest in the arrangement in accordance with paragraphs 20–22 if that party has
rights to the assets, and obligations for the liabilities, relating to the joint operation. If a party that
 participates in, but does not have joint control of, a joint operation does not have rights to the
assets, and obligations for the liabilities, relating to that joint operation, it shall account for its
interest in the joint operation in accordance with the IFRSs applicable to that interest.

Joint ventures
24 A join t ven tu rer sh all recogn ise its in terest in a join t ven tu re as an in vestmen t an d
sh all accou n t for th at in vestmen t u sin g th e equ ity meth od in accordan ce with
IAS 28 In vestmen ts in Associates an d Join t Ven tu res u n less th e en tity is exempted
from applyin g th e equ ity meth od as specified in th at stan dard.

25 A party that participates in, but does not have joint control of, a joint venture shall account for its
interest in the arrangement in accordance with IFRS 9 Financial Instruments, unless it has
significant influence over the joint venture, in which case it shall account for it in accordance
with IAS 28 (as amended in 2011).

Separate financial statements

26 In its separate fin an cial statemen ts, a join t operator or join t ven tu rer sh all accou n t
for its in terest in :
(a) a join t operation in accordan ce with paragraph s 20–22;
(b) a join t ven tu re in accordan ce with paragraph 10 of IAS 27 Separate
F in an cial Statemen ts.

27 In its separate fin an cial statemen ts, a party th at participates in , bu t does n ot h ave
join t con trol of, a join t arran gemen t sh all accou n t for its in terest in :
(a) a join t operation in accordan ce with paragraph 23;
(b) a join t ven tu re in accordan ce with IF RS 9, u n less th e en tity h as sign ifican t
in flu en ce over th e join t ven tu re, in wh ich case it sh all apply paragraph 10 of
IAS 27 (as amen ded in 2011) .

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