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IFRS 11

JOINTARRANGEMENTS

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December 1989 Exposure Draft E35 Financial Reportingof Interests in Joint Ventures

December 1990 IAS 31 Financial Reporting of Interests inJoint Ventures

1 January 1992 Effective date of IAS 31 (1990)1994 IAS 31 was reformattedDecember 1998 IAS 31 was revised by IAS 39 effective 1

January 200118 December 2003 Revised version of IAS 31 issued by the

IASB

History of IAS 31

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1 January 2005 Effective date of IAS 31 (Revised2003)

13 September 2007 Exposure Draft ED 9 JointArrangements issued. Proposes toreplace IAS 31 with a newstandard titled JointArrangements.

10 January 2008 Some significant revisions of IAS 31were adopted as a result of theBusiness Combinations Phase IIProject relating to loss of joint

control

22 May 2008 IAS 31 amended for AnnualImprovements to IFRSs 2007 forcertain disclosures and reversals ofimpairment losses (equity method)

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1 January 2009 Effective date of the May2008 revisions to IAS 311 July 2009 Effective date of the

January 2008 revisions to IAS31

12 May 2011 IAS 31 is superseded by IFRS11 JointArrangements and IFRS 12Disclosure of Interests in OtherEntities effective 1 January2013
http://www.iasplus.com/en/standards/ifrs11http://www.iasplus.com/en/standards/ifrs11http://www.iasplus.com/en/standards/ifrs12http://www.iasplus.com/en/standards/ifrs12http://www.iasplus.com/en/standards/ifrs12http://www.iasplus.com/en/standards/ifrs12http://www.iasplus.com/en/standards/ifrs11http://www.iasplus.com/en/standards/ifrs11

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IAS 31 vs. IFRS 11

IAS 31 INTERESTS

IN JOINT VENTURE

IFRS 11 JOINT

ARRANGEMENTS

Joint Venture - a

contractualarrangementwhereby two ormore parties

undertake aneconomic activitythat is subject to

joint control

Joint Arrangement

= an arrangementwhere two ormore partiescontractually

agree to sharecontrol

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A joint arrangement has the following

characteristics:

The parties are bound by a

contractual arrangement, and

The contractual arrangement givestwo or more of those parties joint

control of the arrangement.

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JOINT CONTROL = the contractually agreedsharing of control of an arrangement, which

exists only when decisions about therelevant activities require the unanimousconsent of the parties sharing control.

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IAS 31 vs. IFRS 11IAS 31

INTERESTS

IN JOINT VENTUREIFRS 11

JOINT

ARRANGEMENTS

Types:

Jointlycontrolled assets

Jointlycontrolledoperations

Jointlycontrolled

entities

Types:

Joint operation

Joint venture

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IAS 31 vs. IFRS 11

IAS 31

INTERESTSIN JOINT VENTURE IFRS 11

JOINTARRANGEMENTS

Jointly controlledoperations involve the use

of assets and otherresources of the venturersrather than theestablishment of aseparate entity

Joint operation Gives parties to the

arrangement directrights to the assetsand obligations forthe liabilities

Parties are called joint

operators Will follow acctg

much like that for jointassets or jointoperations

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IAS 31 vs. IFRS 11

IAS 31 INTERESTS IN

JOINT VENTURE

IFRS 11 JOINT

ARRANGEMENTS

Jointly controlled assets

involve the jointcontrol, and often the

joint ownership, ofassets dedicated to

the joint venture.

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IAS 31 vs. IFRS 11

IAS 31 INTERESTS

IN JOINT VENTURE

IFRS 11 JOINT

ARRANGEMENTS

jointly controlled entity is a corporation,

partnership, or otherentity in which two ormore venturers havean interest, under a

contractualarrangement thatestablishes joint controlover the entity.

A joint venture

is a joint arrangementwhereby the partiesthat have joint controlof the arrangementhave rights to the net

assets of thearrangement.

Those parties arecalled joint venturers.

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IAS 31 vs. IFRS 11

IAS 31 INTERESTS

IN JOINT VENTURE

IFRS 11 JOINT

ARRANGEMENTS

jointly controlled

entity Proportionate

consolidation or Equity method

A joint venture

Equity methodonly

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Structured through anentity

Not structured through anentity

Jointlycontrolledoperations

Jointlycontrolled

assets

Jointly controlled entities

Accounting for assets,liabilities, revenues and

expenses in accordancewith the contractual

arrangements

Proportionateconsolidation

Equitymethod

option

IAS 31: What needed to be improved?

Structure of the joint arrangement The structure ofthe arrangement is

the onlydriver for

the accounting

When

arrangements are

structured inentities, preparers

have an

account ing

opt ion

13

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IFRS 11: The assessments required

15

JOINT CONTROL

Do all the parties, or a group of

the parties, havejoint control

over the arrangement?

TYPE OF

JOINT ARRANGEMENT

Analysis of the parties rights

and obligations arising from the

arrangement

Outside thescope of IFRS 11

No

Yes

Joint operation

Joint venture

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IFRS 11: Assessing joint control

Does the contractual arrangement

give all the parties, or a group of theparties, control of the arrangement

collectively?

Outside thescope ofIFRS 11

No

Yes

16

2011 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org

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collectively?

Do decisions about the relevant

activities require the unanimous

consent of all the parties, or of a group

of the parties, that collectively control

the arrangement?


No

Yes

Yes

No Outside thescope ofIFRS 11

17


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collectively?

Do decisions about the relevant

activities require the unanimous

consent of all the parties, or of a group

of the parties, that collectively control

the arrangement?

The arrangement isjointly controlled.

The arrangement is ajoint arrangement.


No

Yes

Yes

No Outside thescope ofIFRS 11

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IFRS 11: Assessing the classification

Analysis of the parties

rights and obligationsarising from the

arrangement

Jointoperation

Joint

venture

19


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Assess the parties rights andobligations arising from the

arrangementby considering:

(a) thelegal form of the separatevehicle

(b) the terms of the contractualarrangement, and, if relevant,

(c) otherfacts and circumstances

Joint operation Joint venture

Assessment

of the

parties

r ights and

obl igat ions

Accounting forassets, liabilities, revenuesand expenses in accordance with the

contractual arrangements

Accounting for aninvestment using the

equity method

Not structured through a

separate vehicle *

Structured through a

separate vehicle *

Parties have rights

to the net assets

Parties have rights to the assets

and obligations for the liabilities

Account ing

ref lects

the parties

r ights and

obl igat ions

A separate vehicle is a separately identifiable financial structure, including separate legal entities or entities recognised by statute, regardless of whether

those entities have a legal personality.

20IFRS 11: Assessing the classification

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A separate vehicle is a separately identifiable

financial structure, including separate legal entities

or entities recognised by statute, regardless ofwhether those entities have a legal personality.

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Joint operation


Account forassets, liabilities, revenues andexpenses in accordance with the contractual

arrangements

Not structured through a separate vehicle

Parties have rights to

the assets and

obligations for the

liabilities

22


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Consider: - the legal form of the separate vehicle,- the terms of the contractual arrangement,- when relevant, otherfacts and

circumstances

Joint operationJoint venture


Account forassets,liabilities, revenues and

expenses

Account for an investmentusing the equity method

Structured through a separate vehicle

Parties have rights

to the net assets

Parties have rights to the assets

and obligations for the liabilities

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24

Terms of thecontractual

arrangement

Other facts andcircumstances

Legal form of

the separatevehicle

Does the legal form of the separate

vehicle give the parties rights to the assetsand obligations for the liabilities, relating

to the arrangement?

Do the terms of the contractualarrangement specify that the parties

have rights to the assets, and obligations

for the liabilities, relating to thearrangement?

Yes

Yes

No

Have the parties designed thearrangement so that

(a) its activities primarily aim to providethe parties with an output (ie the

parties have rights to substantially allthe economic benefits of the assetsheld in the separate vehicle) and

(b) (b) it depends on the on the partieson a continuous basis for settling the

liabilities relating to the activityconducted through the

arrangement?

No

No

Yes

Joint Venture

JointOperatio

n


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IFRS 12: Disclosures for joint arrangements

25

Jointoperations

Jointventures

Summarised financial information foreach individually material joint ventureand in total for all other joint ventures.

Description of the nature, extent and the financial effectsof an entitys interests in joint arrangements


ifrs 11.pptx

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