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JA Handouts
JA Handouts
A JOINT ARRANGEMENT is an arrangement over which two or more parties have joint control. JOINT CONTROL is the
contractually agreed sharing of control of an arrangement, which exists only when the decisions about the relevant activities
require the unanimous consent of the parties sharing control.
PFRS 11
TYPES OF JOINT
ARRANGEMENT (FULL PFRS)
JOINT OPERATION vs. JOINT VENTURE
Joint Operations Joint Venture
Terms of engagement The parties with joint control have rights to The parties with joint control have rights to the net
the assets and obligations for the liabilities assets of the arrangement.
of the arrangement
Rights to assets The parties share all interests in the The assets belong to the arrangement. The
assets in a specified proportion. parties to the arrangement do not have direct
rights, title or ownership of the assets.
Obligations for liabilities The parties share all liabilities, obligations, The joint arrangement is liable for the debts and
costs and expenses in a specified obligations of the arrangement. The venturers are
proportion. liable only to the extent of their investments.
Creditors do not have any recourse against any
The parties are liable as to third parties party in for debts or obligations
claiming on the arrangement.
Without a separate vehicle, the joint To be a joint venture, there must be a separate
arrangement is a joint operation. vehicle.
► Separate vehicle: A separately identifiable financial structure, including separate legal entities or entities
recognized by statute, regardless of whether those entities have a legal personality
PFRS 11 Accounting for SMEs
Joint Operations
Jointly controlled
operation
Joint Arrangement
Jointly controlled
Joint Venture (Equity entities
Method) (Equity, cost or fair value
model)
Jointly controlled operations
● Recognise its assets, liabilities, expenses, and its share of income.
Jointly controlled assets
● Recognise its assets, liabilities, revenue, and expenses, and/or its relative shares thereof.
Jointly controlled entities
● Equity method or proportionate consolidation
Note: The accounting for jointly controlled operations and assets that are now joint operations, and jointly controlled entities
now concluded to be joint ventures under PRFS11, will be unchanged in the separate financial statements.
JOURNAL ENTRIES
EQUITY METHOD COST MODEL FAIR VALUE MODEL
Investment income xx
Investment in JV xx
(recognize whole year dividend) (recognize whole year dividend) (recognize whole year dividend)
Amortization of Investment in JV xx
overvaluation
Investment income xx
Gain on investment xx
Or
Loss on investment xx
Investment in JV xx
Investment in JV xx Investment in JV xx
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