Joint Arrangements (IFRS 11

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International Financial Reporting Standards
Prof. Dr. Manfred Bolin Akash Chaudhary|Amit Kumar Shaw

Agenda ‡ ‡ ‡ ‡ ‡ ‡ ‡ Core Principle Joint Arrangements Joint Control Types of Joint Arrangements Financial Statements of parties Separate financial Statement Applicability and early adoption .

[IFRS 11:1-2] .Core principle ‡ History of IFRS 11 November 2004 13 Sept 2007 12 May 2011 1 January 2013 Project on joint arrangements added to the IASB's agenda ED 9 Joint Arrangements published IFRS 11 Joint Arrangements published Effective date of IFRS 11 ‡ A party to a joint arrangement determines the type of joint arrangement in which it is involved by assessing its rights and obligations and accounts for those rights and obligations in accordance with that type of joint arrangement.

‡ A joint arrangement is either a joint operation or a joint venture.Joint Arrangements ‡ A joint arrangement is an arrangement of which two or more parties have joint control. [IFRS 11:6] . and ‡ the contractual arrangement gives two or more of those parties joint control of the arrangement. [IFRS 11:4] ‡ Characteristics: [IFRS 11:5] ‡ the parties are bound by a contractual arrangement.

or a group of the parties. control the arrangement ‡ Secondly. an entity shall assess whether it has joint control of the arrangement ‡ Can prevent any of the other parties. [IFRS 11:7] ‡ An entity first assesses whether the parties. from making unilateral decisions. [IFRS 11:B9] . or a group of the parties.Joint Control ‡ Exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

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relating to the arrangement. Those parties are called joint operators. and obligations for the liabilities. Those parties are called joint venturers. [IFRS 11:16] .Types of Joint Arrangements ‡ A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets. [IFRS 11:15] ‡ A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.

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including its share of any liabilities incurred jointly. ‡ its revenue from the sale of its share of the output of the joint operation. and ‡ its expenses. including its share of any assets held jointly.Financial Statements of parties to a joint arrangement Joint operations A joint operator recognises in relation to its interest in a joint operation: [IFRS 11:20] ‡ its assets. . ‡ its share of the revenue from the sale of the output by the joint operation. including its share of any expenses incurred jointly. ‡ its liabilities.

but does not have joint control of. [IFRS 11:24] ‡ A party that participates in. a joint venture accounts 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 accounts for it in accordance with IAS 28 (as amended in 2011).Joint ventures ‡ A joint venturer recognises its interest in a joint venture as an investment and shall account for that investment using the equity method in accordance with IAS 28 Investments in Associates and Joint Ventures unless the entity is exempted from applying the equity method as specified in that standard. [IFRS 11:25] .

unless the entity has significant influence over the joint venture. ‡ a joint venture in accordance with IFRS 9. in which case it shall apply paragraph 10 of IAS 27 (as amended in 2011). [IFRS 11:27] . a joint arrangement shall account for its interest in: ‡ a joint operation in accordance with paragraphs 23. [IFRS 11:26] ‡ If the entity is a party that participates in. but does not have joint control of. ‡ a joint venture in accordance with paragraph 10 of IAS 27 Separate Financial Statements.Separate Financial Statements ‡ Depends on the involvement of the entity in that joint arrangement and the type of the joint arrangement: ‡ If the entity is a joint operator or joint venturer it shall account for its interest in ‡ a joint operation in accordance with paragraphs 20-22.

[IFRS 11:Appendix C1] ‡ An entity may apply IFRS 11 to an earlier accounting period. but if doing so it must disclose the fact that is has early adopted the standard and also apply: [IFRS 11. .Applicability and Early Adoption ‡ IFRS 11 is applicable to annual reporting periods beginning on or after 1 January 2013.Appendix C1] ‡ IFRS 10 Consolidated Financial Statements ‡ IFRS 12 Disclosure of Interests in Other Entities ‡ IAS 27 Separate Financial Statements (as amended in 2011) ‡ IAS 28 Investments in Associates and Joint Ventures (as amended in 2011).

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