(Summary) Ind AS 111

Joint Arrangements

is to establish principles for financial reporting by entities that have an interest in arrangements that are controlled jointly.

It defines joint control and requires an entity that is a party to a joint arrangement to determine the type of joint arrangement by assessing its rights and obligations and to account for those rights and obligations in accordance with that type of joint arrangement.

Is applied by all entities that are a party to a joint arrangement.

  1. Joint Arrangement
  2. Joint Control
  3. Joint Operation
  4. Joint Operator
  5. Joint Venture
  6. Separate Vehicle

Joint arrangement: An arrangement of which two or more parties have joint control.

Joint Control: The contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

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.

Joint Venture: A joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.

Joint Venturer: A party to a joint venture that has joint control of that joint venture.

Separate Vehicle: A separately identifiable financial structure, including separate legal entities or entities recognised by statute, regardless of whether those entities have a legal personality.

A joint arrangement is an arrangement of which two or more parties have joint control.

A joint arrangement has the following characteristics:

  • the parties are bound by a contractual arrangement, and
  • the contractual arrangement gives two or more of those parties joint control of the arrangement.

A joint arrangement is either a joint operation or a joint venture.

Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

Joint arrangements are either joint operations or joint ventures:

  • joint operation is 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.
  • 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. Those parties are called joint venturers.
  • The classification of joint arrangements requires the parties to assess their rights and obligations arising from the arrangement.
  • When making that assessment, an entity shall consider the following:
    1. the structure of the joint arrangement.
    2. when the joint arrangement is structured through a separate vehicle:
      • the legal form of the separate vehicle;
      • the terms of the contractual arrangement;
      • when relevant, other facts and circumstances.

Joint Operations:

A joint operator shall recognise in relation to its interest in a joint operation:

    1. its assets including its share of any assets held jointly;
    2. its liabilities including its share of any liabilities incurred jointly;
    3. its revenue from the sale of its share of the output arising from the joint operation;
    4. its share of the revenue from the sale of the output by the joint operation; and
    5. its expenses, including its share of any expenses incurred jointly. 

Joint Ventures:

A joint venturer shall recognise its interest in a joint venture as an investment and shall account for that investment using the equity method in accordance with Ind AS 28, Investments in Associates and Joint Ventures, unless the entity is exempted from applying the equity method as specified in that standard. 

Separate Financial Statements:

In its separate financial statements, a joint operator or joint venturer, shall account for its interest in:

    1. a joint operation in accordance with paragraphs 20–22;
    2. a joint venture in accordance with paragraph 10 of Ind AS 27, Separate Financial Statements.

In its separate financial statements, a party that participates in, but does not have joint control of a joint arrangement shall account for its interest in:

    1. a joint operation in accordance with paragraph 23;
    2. a joint venture in accordance with Ind AS 109, unless the entity has significant influence over the joint venture, in which case it shall apply paragraph 10 of Ind AS 27.

 

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