13 If facts and circumstances change, an entity shall reassess whether it still has joint control of the arrangement.
Types of joint arrangement Types of joint arrangement
Types of joint arrangement
14 An entity shall determine the type of joint arrangement in which it is involved. The classification of a joint arrangement as a joint operation or a joint venture depends upon the rights and obligations of the parties to the arrangement.
15 A 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, relating to the arrangement. Those parties are called joint operators.
16 A joint venture is a joint arrangement 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.
17 An entity applies judgement when assessing whether a joint arrangement is a joint operation or a joint venture. An entity shall determine the type of joint arrangement in which it is involved by considering its rights and obligations arising from the arrangement. An entity assesses its rights and obligations by considering the structure and legal form of the arrangement, the terms agreed by the parties in the contractual arrangement and, when relevant, other facts and circumstances (see paragraphs B12–B33).
18 Sometimes the parties are bound by a framework agreement that sets up the general contractual terms for undertaking one or more activities. The framework agreement might set out that the parties establish different joint arrangements to deal with specific activities that form part of the agreement. Even though those joint arrangements are related to the same framework agreement, their type might be different if the parties’ rights and obligations differ when undertaking the different activities dealt with in the framework agreement. Consequently, joint operations and joint ventures can coexist when the parties undertake different activities that form part of the same framework agreement.
19 If facts and circumstances change, an entity shall reassess whether the type of joint arrangement in which it is involved has changed.
Financial statements of parties to a joi Financial statements of parties to a joint arrangement
The Australian Accounting Standards Board made Accounting Standard AASB 11 Joint Arrangements under section 334 of the Corporations Act 2001 on 29 August 2011.
This compiled version of AASB 11 applies to annual reporting periods beginning on or after 1 January 2016. It incorporates relevant amendments contained in other AASB Standards made by the AASB up to and including 28 January 2015 (see Compilation Details).
Section 13 - AASB 11 - Joint Arrangements - August 2011 - If facts and circumstances change, an entity shall reassess whether it still has joint control of the arrangement. | Zoe
Joint Arrangements
Objective
1 The objective of this Standard is to establish principles for financial reporting by entities that have an interest in arrangements that are controlled jointly (ie joint arrangements).
Meeting the objective
2 To meet the objective in paragraph 1, this Standard defines joint control and requires an entity that is a party to a joint arrangement to determine the type of joint arrangement in which it is involved by assessing its rights and obligations and to account for those rights and obligations in accordance with that type of joint arrangement.
Application
Aus2.1 This Standard applies to:
(a) each entity that is required to prepare financial reports in accordance with Part 2M.3 of the Corporations Act and that is a reporting entity;
(b) general purpose financial statements of each other reporting entity; and
(c) financial statements that are, or are held out to be, general purpose financial statements.
Aus2.2 This Standard applies to annual reporting periods beginning on or after 1 January 2013, except that for not-for-profit entities it applies to annual reporting periods beginning on or after 1 January 2014.
[Note: For application dates of paragraphs changed or added by an amending Standard, see Compilation Details.]
Aus2.3 This Standard may be applied by:
(a) for-profit entities to annual reporting periods beginning on or after 1 January 2005 but before 1 January 2013; and
(b) not-for-profit entities to annual reporting periods beginning on or after 1 January 2013 but before 1 January 2014.
If an entity applies this Standard to such an annual reporting period in accordance with paragraph (a) or (b), it shall disclose that fact and apply AASB 10 Consolidated Financial Statements, AASB 12 Disclosure of Interests in Other Entities, AASB 127 Separate Financial Statements (August 2011) and AASB 128 Investments in Associates and Joint Ventures (August 2011), at the same time.
Aus2.4 [Deleted by the AASB]
Aus2.5 When applied or operative, this Standard supersedes:
(a) AASB 131 Interests in Joint Ventures (July 2004, as amended); and
(b) Interpretation 113 Jointly Controlled Entities – Non-Monetary Contributions by Venturers (July 2004, as amended).
Scope
3 This Standard shall be applied by all entities that are a party to a joint arrangement.
4 A joint arrangement is an arrangement of which two or more parties have joint control.
5 A joint arrangement has the following characteristics:
(a) The parties are bound by a contractual arrangement (see paragraphs B2–B4).
(b) The contractual arrangement gives two or more of those parties joint control of the arrangement (see paragraphs 7–13).
6 A joint arrangement is either a joint operation or a joint venture.
Joint control
7 Joint control is 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.
8 An entity that is a party to an arrangement shall assess whether the contractual arrangement gives all the parties, or a group of the parties, control of the arrangement collectively. All the parties, or a group of the parties, control the arrangement collectively when they must act together to direct the activities that significantly affect the returns of the arrangement (ie the relevant activities).
9 Once it has been determined that all the parties, or a group of the parties, control the arrangement collectively, joint control exists only when decisions about the relevant activities require the unanimous consent of the parties that control the arrangement collectively.
10 In a joint arrangement, no single party controls the arrangement on its own. A party with joint control of an arrangement can prevent any of the other parties, or a group of the parties, from controlling the arrangement.
11 An arrangement can be a joint arrangement even though not all of its parties have joint control of the arrangement. This Standard distinguishes between parties that have joint control of a joint arrangement (joint operators or joint venturers) and parties that participate in, but do not have joint control of, a joint arrangement.
12 An entity will need to apply judgement when assessing whether all the parties, or a group of the parties, have joint control of an arrangement. An entity shall make this assessment by considering all facts and circumstances (see paragraphs B5–B11).
13 If facts and circumstances change, an entity shall reassess whether it still has joint control of the arrangement.
Types of joint arrangement
14 An entity shall determine the type of joint arrangement in which it is involved. The classification of a joint arrangement as a joint operation or a joint venture depends upon the rights and obligations of the parties to the arrangement.
15 A 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, relating to the arrangement. Those parties are called joint operators.
16 A joint venture is a joint arrangement 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.
17 An entity applies judgement when assessing whether a joint arrangement is a joint operation or a joint venture. An entity shall determine the type of joint arrangement in which it is involved by considering its rights and obligations arising from the arrangement. An entity assesses its rights and obligations by considering the structure and legal form of the arrangement, the terms agreed by the parties in the contractual arrangement and, when relevant, other facts and circumstances (see paragraphs B12–B33).
18 Sometimes the parties are bound by a framework agreement that sets up the general contractual terms for undertaking one or more activities. The framework agreement might set out that the parties establish different joint arrangements to deal with specific activities that form part of the agreement. Even though those joint arrangements are related to the same framework agreement, their type might be different if the parties’ rights and obligations differ when undertaking the different activities dealt with in the framework agreement. Consequently, joint operations and joint ventures can coexist when the parties undertake different activities that form part of the same framework agreement.
19 If facts and circumstances change, an entity shall reassess whether the type of joint arrangement in which it is involved has changed.
Financial statements of parties to a joint arrangement