PFRS #11 Joint Arrangements

• joint arrangement is an arrangement of which two or more parties have joint control
• essential elements in the definition of joint arrangement:

  1. contractual arrangement
  2. joint control
• contractual arrangement is the existence of contractual agreement for sharing of joint control over an investee distinguishes from other investments (such as investments in equity securities measured at fair value, investment in associate, and investment and subsidiary)
• joint control is the contractually agreed sharing of control of an arrangement. it require the unanimous consent of the parties sharing control

  in contrast with significant influence and control, an investor obtains joint control over an investee through a contractual agreement with fellow investors
• 1. significant influence is the power to participate in the financial and operating policy decisions of an investee but is not control or joint control over those policies

  2. control is the power to govern the financial and operating policies of an investee as to obtain benefits from it
• party to a joint arrangement - is an entity that participates in a join arrangement, regardless of whether that entity has joined control of the arrangement
• types of joint arrangement:

  1. joint operation - is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities. those parties are called joint operators.
  2. joint venture - is a joint agreement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. those parties are called joint venturers
• separate vehicle - is a separately identifiable financial structure, including separate legal entities or entities recognized by statute, regardless of whether those entities have legal personality
• joint operator - recognizes its own assets, liabilities, income and expenses "plus its share" in the joint operation's assets, liabilities, income and expenses