Accounting for rights to assets and obligations for liabilities
D and E establish a joint arrangement (F) using a separate vehicle, but the legal form of the separate vehicle does not confer separation between the parties and the separate vehicle itself. That is, D and E have rights to the assets and obligations for the liabilities of F (F is a joint operation). Neither the contractual terms, nor the other facts and circumstances indicate otherwise. Accordingly, D and E account for their rights to assets and their obligations for liabilities relating to F in accordance with relevant IFRS.
D and E each own 50% of the equity (e.g. shares) in F. However, the contractual terms of the joint arrangement state that D has the rights to all of Building No. 1 and the obligation to pay all the third party debt in F. D and E have rights to all other assets in F, and obligations for all other liabilities in F in proportion to their equity interests (i.e. 50%). F’s balance sheet is as follows (in CUs):
|
Assets |
liabilities and equity |
||
|
Cash |
20 |
Debt |
120 |
|
Building No. 1 |
120 |
Employee benefit plan obligation |
50 |
|
Building No. 2 |
100 |
Equity |
70 |
|
Total assets |
240 |
Total liabilities and equity |
240 |
Under IFRS 11, D would record the following in its financial statements, to account for its rights to the assets in F and its obligations for the liabilities in F. This may differ from the amounts recorded using proportionate consolidation.
|
Assets |
liabilities and equity |
||
|
Cash |
10 |
Debt (2) |
120 |
|
Building No. 1 (1) |
120 |
Employee benefit plan obligation |
25 |
|
Building No. 2 |
50 |
Equity |
35 |
|
Total assets |
180 |
Total liabilities and equity |
180 |
(1)Since D has the rights to all of Building No. 1, it records that amount in its entirety.
(2)D”s obligations arc for the third-party debt in its entirety.
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
