Joint arrangement with liability for the obligations of the arrangement A and B jointly establish an entity (C), which is considered a separate legal structure distinct from its members in the jurisdiction in which it is formed. This jurisdiction requires that such a legal structure has at least two partners but does not have any minimum capital requirements. A and B each have a 50 […]

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 […]

Joint operation with a non-controlling interest passive investor A and B enter into a joint operation Z, which is contained in a separate vehicle. Each of the two entities owns 40% of the shares of the separate vehicle. The remaining 20% of Z is owned by C, which is not party to the joint agreement and is considered a passive investor. The legal form of […]

Disposal in immediately preceding period A calendar-year entity had an interest in a jointly controlled entity for which it applied proportionate consolidation. IFRS 11 is required to be applied for the entity’s annual period beginning 1 January 2013. The jointly controlled entity is a joint venture under IFRS 11 and the equity method is applied. In 2012, the entity lost joint control of the jointly […]

Protective rights and joint control A, B and C enter into a joint arrangement to conduct an activity in entity Z. The contractual agreement between A and B states that they must agree to direct all of the activities of Z. The agreement of C is not required, except that C has the right to veto the issuance of debt or equity instruments by Z. […]

Remeasurement from associate to jointly controlled entity An entity had an interest in an associate. In 2010, the entity gained joint control of the associate (i.e. the associate became a jointly controlled entity). In accordance with the previous version of IAS 28, the entity re-measured the retained interest to fair value. The entity subsequently accounted for its investment in the jointly controlled entity using proportionate […]

De facto agents in joint control A contractual arrangement has three parties: A has 50% of the voting rights and B and C each have 25%. The contractual arrangement between A, B and C specifies that at least 75% of the voting rights are required to make decisions about the relevant activities of the arrangement. Analysis There is neither control nor joint control, because more […]

Variability of returns arising from issue of credit default swap (2) A reporting entity enters into a credit default swap with a structured entity. The credit default swap gives the structured entity exposure to Entity Z”s credit risk. The purpose of the arrangement is to give the investors in the structured entity exposure to Entity Z”s credit risk (Entity Z is unrelated to any party […]

Role of a government A government owns land, which is believed to contain oil reserves. The government enters into a contractual arrangement with an oil company to drill for oil and sell the product, which the oil company will do through a separate vehicle. The oil company will have to evaluate the contractual terms of the arrangement closely to determine whether it has joint control, […]

Illustrative example of disclosure of non-controlling interests The group has three subsidiaries with material non-controlling interests (NCI). Information regarding these subsidiaries is as follows: 20X3               Principal place of   NCI in Profit/(loss) allocated to   Accumulated Dividends paid to NCI Name business subsidiary NCI e000 NCI e000 in year e000 R Limited France 40% 200 1,300 100 S […]