Parties that have joint control of the arrangement

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Reference no: EM131003973

Joint ventures. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement (i.e. joint venturers) have rights to the net assets of the arrangement. Joint ventures are usually structured through a legal entity. But the existence of a legal structure in a joint arrangement does not automatically means that it qualifies as a joint venture. They will have to be assessed to determine whether the ventur- ers' rights and exposures are to the entity's net assets, or to its underlying (gross) assets and liabilities. The latter category will be classified as joint operations because this better reflects the economic substance of the arrangement. A joint venture intersects with associates - a company or other legal vehicle is created, the venturers make investments in this entity which in turn owns assets and undertakes operations. A joint venturer recognizes its investment in a joint venture and accounts for it using the equity method. IFRS 11 does no longer allow the option of using proportionate consolidation for joint ventures as in the former IASB rules.

Reference no: EM131003973

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