Chapter 9 - Joint Arrangements

Question 1

Joint Arrangements

Answer 1

Where two or more separate entities have a contractual joint interest in another project, entity or investment

Question 2

Accounting standard for joint arrangements

Answer 2

IFRS 11

Question 3

Joint Control

Answer 3

Three key aspects of control

• Contractually agreed terms of sharing control
• Control is agreed as joint
• Unanimous Consent is required from each party

Question 4

Joint Control

Answer 4

Only exists when two or more parties have a contractual agreement to unanimously agree

Question 5

Types of Joint Arrangements

Answer 5

Joint Operation and Joint Venture

Question 6

Joint Operation

Answer 6

No separate entity is established.

Shown as an investment in the financial statements

Question 7

Joint Operation Accounting

Answer 7

Assets / Liabilities fully owned and controlled plus share of jointly controlled assets / liabilities

Income / Expenses fully owned and controlled plus share of jointly controlled Income / Expenses

Each individual entity shows its own assets, liabilities, expenses, share of revenues

Question 8

Joint Venture

Answer 8

A separate entity is established

Having its own separate accounts

Question 9

Joint Venture Accounting

Answer 9

SOFP - Cost of Investment in the Joint Venture

SOCI - Investment Income from JV, share of profit after tax

IAS 28

Question 10

Joint Venture Accounting

Answer 10

Equity method

Adjustments:

• eliminate dividends from JV
• calculate group share of JV profit
• incorporate JV by adding amendments

IAS 28