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1. ifrs 11 is where two or more parties have joint control in their operating and financial activities (joint operation) and has the right to use the net assets)
in this question burley, burley has entered into agreement with heavy and Jorge each holds 1/3 of wells, the operating and financial polices has to be approved by the ventures.
so Jorge and heavy has control of operating and financial activities. it states it does not meet the definition of joint control under ifrs11 why is that? as I can see the two ventures has control.
is this because burley is part of a company who has joint control, so 3 parties must have control and not just Jorge and heavy? and why ias 28? is it because burley does not exercise significant influence over wells hence treated as ias 28?
2. burley cannot use proportionate method because as permitted by ias 31 sinceit is not permitted in ifrs 11 that means proportionate method can be used in this scenario is this correct?
3. lastly I do not know how to get the carrying amount for 2008. dep 60 and decommissioning costs 14.1.
It’s not a joint venture because Burley has not got joking control. Joint control would have been applicable if decisions had had to be unanimous but they’re not so Jorge and Heavy could exclude Burley from any influence.
As equal shareholders, however, it IS acceptable for wach of the three to treat their investment as an associate
Proportional consolidation has gone as a concept. It used to be allowed, but those days are history so your observation in your second question is incorrect
60 depreciation is based on 240 cost divided by 40 years’ life and it was built 10 years ago
14.1 is the adjustment to the provision as a result of the revision in the cost of capital from 5% to 7%. Burley had a provision of 32.6 but this has fallen to 18.5 meaning that we has over-provided by 14.1. So Dr provision and credit the asset with the fall in the provision of 14.1
Hope that helps
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