Ch. 28 Joint Arrangements

Question 1

IFRS 11

Answer 1

ASPE 3056

Question 2

What is a joint arrangement and joint control?

Answer 2

Binds two or more parties contractually - they must have joint control - contractually agreeing on sharing of controls of an arrangement; decisions require the unanimous consent of the parties sharing controls.

Question 3

What is a joint operating?

Answer 3

parties have rights to assets and obligations of the joint arrangement. No separate investment account is created, instead it is in the financial statements. Record entities interest as a portion of the assets and liabilities acquired at the fair value of the compensation given up.

Moving forward, record the following:

• its assets - including its share of any assets held jointly
• its liabilities - including its share of any liabilities incurred jointly
• its revenues from the sale of its share of the output arising form the joint operations
• its expenses, including its share of any expenses incurred jointly.

Question 4

What is a joint venture

Answer 4

parties only have rights to only the net assets fo the joint arrangement. - Equity stake

Folows IAS 28 0 investment in associates and joint ventures

Question 5

Consideration to determine which is which - we are looking to see which parties have rights to assets and obligations for the liabilities

Answer 5

1. Structure - Arrangements are not set up through a separate vehicle
2. Legal form
3. Contractual terms
4. Other facts and circumstances
   IFRS 11.17

Question 6

Acquisition for Joint ventures

Answer 6

You would record as what you invested. In the case that you contributed an asset instead of cash, you would record a gain or loss times the amount you own on the assets and, remaining amount on those gains would be called deferred if it is still owned by the contributing party (only if there is commercial substance)

Question 7

Subsequent measurement for joint ventures

Answer 7

profits and losses in the venture increases or decreases the investment account in proportion to the interest in it.

money received from the joint venture decreases the investment account and does not affect net income.

• Take their earnings less any physical assets you have contributed and then x 50%

Question 8

What is the difference bewteen IFRS and ASPE?

Answer 8

Under IFRS, you hvae joint ventures and joint operations

Under ASPE, you have jointly assets, jointly controlled operations, and jointly controlled enterprises.

Operations and assets are the same as joint operations - require the investor in the joint arrangements to recognize its share of assets controlled, liabilities incurred,d revenues and expenses.

Joint venture is the same as jointly controlled enterpricesse, and require the investor in the joint arrangement to use either the equity or the cost method in reporting the investment.