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Sir what is the difference between joint arrangement and joint venture? Are they both Joint Control? And Does Equity Accounting Apply to BOTH?
This is part of the definition section from the IASPLUS site on IFRS 11
“Joint arrangement
An arrangement of which two or more parties have joint control
Joint control
The contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control
Joint operation
A joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement
Joint venture
A joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement”
As for the accounting requirements – it’s not as simple as saying “Yes, equity accounting for both”
It’s more tricky than that
However … IFRS 11 is not within the scope of the F7 syllabus so there’s no panic. At least, not yet!
And even at P2, IFRS 11 is not a frequent visitor
OK?
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