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  • 2013 C13-7 OPERATORS OF JOINT VENTURES - Printing

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    Melisa Tarigan
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    Operators of joint ventures are usually paid management fees for their duties. IAS 31 requires operators to account for management fees in accordance with IAS 18. An operator acting as an agent on behalf of the joint venture should not account for payments as costs or reimbursements as revenue in its income statement. However, an operator charging an overhead management fee not intended to defray specific costs cannot be considered an agent and should report management fee income and costs on a gross basis in its income statement.

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    Operators of joint ventures are usually paid management fees for their duties. IAS 31 requires operators to account for management fees in accordance with IAS 18. An operator acting as an agent on behalf of the joint venture should not account for payments as costs or reimbursements as revenue in its income statement. However, an operator charging an overhead management fee not intended to defray specific costs cannot be considered an agent and should report management fee income and costs on a gross basis in its income statement.

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    9 views1 page

    2013 C13-7 OPERATORS OF JOINT VENTURES - Printing

    Uploaded by

    Melisa Tarigan
    Operators of joint ventures are usually paid management fees for their duties. IAS 31 requires operators to account for management fees in accordance with IAS 18. An operator acting as an agent on behalf of the joint venture should not account for payments as costs or reimbursements as revenue in its income statement. However, an operator charging an overhead management fee not intended to defray specific costs cannot be considered an agent and should report management fee income and costs on a gross basis in its income statement.

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    International Accounting and Auditing / International Financial Reporting Standards / Ernst Young / International GAAP 2015 / (2013) Chapter 13

    Joint ventures (IAS 31) / 7 OPERATORS OF JOINT VENTURES

    7 OPERATORS OF JOINT VENTURES


    One or more venturers may act as the operator or manager of a joint venture. Operators are
    usually paid a management fee for such duties. The fees are accounted for by the joint
    venture as an expense. IAS 31 requires the operators or managers of a joint venture to
    account for any such fees in accordance with IAS 18 – Revenue (see Chapter 30). [IAS
    31.52-53].
    An operator will often act as an agent and pay for specific costs on behalf of the joint venture
    (i.e. the principal). Such payments should not be accounted for as costs in the income
    statement of the operator and the reimbursement by the joint venture should not be
    presented as revenue. However, an operator that charges a management fee, which is
    intended to defray unspecified overhead costs, cannot be said to act as an agent. Therefore
    the operator should account for the management fee income and overhead costs in its
    income statement on a gross basis as it is not acting as an agent and does not meet the
    offset criteria in IAS 1. [IAS 1.32-35].

    Go To Document ID: (2013) IG Chapter 13, 7


    System ID: 261501175~1987145
    Date: 13 Jan 2015

    Printed 30 Nov 2015 Page 1 of 1

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