Upload
stephen-njoku
View
77
Download
2
Embed Size (px)
DESCRIPTION
Ifrs 11 joint arrangements
Citation preview
ICAN IFRS CertificationTraining Programme
Module II
25 September 2012
Abuja
2ICAN’S IFRS Certification Training – IAS 21
IFRS 11
Joint Arrangements
3
Contents1. Key definitions
3. Types of Joint Arrangement
4. Classification of joint arrangements
5. Financial statements of parties in joint arrangement
2. Core Principle
6. Disclosures
7. Applicability and early adoption
Key definitions‒ Joint arrangement is an arrangement of which two or more parties have joint
control
‒ 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 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.
‒ 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.
‒ Joint venturer is a party to a joint venture that has joint control of that joint venture.
‒ Party to a joint arrangement is an entity that participates in a joint arrangement, regardless of whether that entity has joint control of the arrangement.
5
The principle in IFRS 11
IFRS 11 establishes a principle-based approach for the
accounting for joint arrangements:
Parties to a joint arrangement recognise their
rights and obligations arising from
the arrangement
5
© 2011 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org
The core principle
The core principle of IFRS 11 is that 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. [IFRS 11:1-2]
7
JOINT CONTROL
Do all the parties, or a group of the parties, have joint
control over the arrangement?
TYPE OF
JOINT ARRANGEMENT
Analysis of the parties’ rights
and obligations arising from the arrangement
Outside the
scope of IFRS 11
No
Yes
Joint operation
Joint venture
IFRS 11: The assessments required
IFRS 11: Assessing joint control
Does the contractual arrangement
give all the parties, or a group of the parties, control of the
arrangement collectively?
Outside the
scope of IFRS 11
No
Yes
8
© 2011 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org
IFRS 11: Assessing joint control
Does the contractual arrangement
give all the parties, or a group of the parties, control of the
arrangement 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?
Outside the
scope of IFRS 11
No
Yes
Yes
NoOutside the
scope of IFRS 11
9
© 2011 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org
IFRS 11: Assessing joint control
Does the contractual arrangement
give all the parties, or a group of the parties, control of the
arrangement 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 is jointly controlled.
The arrangement is a joint arrangement.
Outside the
scope of IFRS 11
No
Yes
Yes
NoOutside the
scope of IFRS 11
10
© 2011 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org
Types of joint arrangements
Analysis of the parties’ rights and
obligations arising from the arrangement
Joint operation
Joint
venture
11
© 2011 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org
Joint operation
A 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. [IFRS 11:15]
Joint venture
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. Those parties are called joint venturers. [IFRS 11:16]
Classification of joint arrangement
The classification of a joint arrangement as a joint operation or a joint venture depends upon the rights and obligations of the parties to the arrangement.
An entity determines the type of joint arrangement in which it is involved by considering the structure and form of the arrangement, the terms agreed by the parties in the contractual arrangement and other facts and circumstances. [IFRS 11:6, IFRS 11:14, IFRS 11:17]
Financial statements of parties to a joint arrangement – joint operationA joint operator recognises in relation to its interest in a joint operation: [IFRS 11:20]
•its assets, including its share of any assets held jointly;
•its liabilities, including its share of any liabilities incurred jointly;
•its revenue from the sale of its share of the output of the joint operation;
•its share of the revenue from the sale of the output by the joint operation; and
•its expenses, including its share of any expenses incurred jointly.
A joint operator accounts for the assets, liabilities, revenues and expenses relating to its involvement in a joint operation in accordance with the relevant IFRSs. [IFRS 11:21]
Financial statements of parties to a joint arrangement – joint venture
• A joint venturer recognises its interest in a joint venture as an investment.
• It 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 11:24]
Disclosure requirements• Aligned effective date for IFRS 10, IFRS The There are no disclosures specified in IFRS 11. Instead, IFRS 12 Disclosure of Interests in Other Entities outlines the disclosures required.
17
© 2011 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org
Applicability and early adoption
Aligned effective date for IFRS 10, IFRS The The effective date of IFRS 10, IFRS 11, IFRS 12
nd IFRS 12:•The IFRSs are to be applied for annual periods beginning on or after 1 January 2013.
•Earlier application is permitted. However, if an entity applies any of the IFRSs earlier, it is required to apply the other IFRSs at the same time.
18
© 2011 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org