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Unformatted text preview: that could indicate that an arrangement is a joint operation is if the arrangement is designed so that the jointly controlled company cannot undertake its own trade, and can only trade with the parties to the joint arrangement. Related agreements and other facts and circumstances also need to be considered. A joint venturer will account for its involvement in the joint venture using the equity method in accordance with IAS 28 (2011) Investments in Associates and Joint Ventures. Joint operation A joint operation is an arrangement in which the jointly controlling parties have rights to assets and obligations for Accounting for joint arrangements from 2013
A new standard issued in 2011 significantly impacts the accounting for joint arrangements The IASB issued IFRS 11 in May 2011. The standard is effective for periods beginning on or after 1 January 2013, with early adoption permitted subject to some conditions. There are two classifications of joint arrangements under IFRS 11: Joint ventures and joint operations. The Accounting for joint ventures prior to adoption of IFRS 11
Accounting is based on whether there is a separate legal entity. An accounting policy choice is available for jointly controlled entities Accounting for joint arrangements (currently referred to as joint ventures) 2011 KPMG International Cooperative ("KPMG International"). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 2011 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved. Impact of IFRS: Oil and Gas 15 liabilities relating to the arrangement. An arrangement that is not structured through a separate vehicle will be a joint operation; however, other arrangements may also fall into this classification depending on the rights and obligations of the parties to the arrangement. A joint operator recognises its own assets, liabilities and transactions, including its share of those incurred jointly. Discussion Paper Extractive Activities
Joint arrangements were not i...
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