Joint Ventures
IAS 31 Interests in Joint Ventures sets out the requirements for the accounting for interests in joint ventures. IAS 31 defines a joint venture as a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control.
The main focus of the project has been to address the two aspects of IAS 31 that the Board considers are an impediment to high quality reporting of joint arrangement activities:
- IAS 31 uses the form of the arrangement as the primary determinant of the accounting, which does not always reflect the underlying rights and obligations agreed to by the parties.
- IAS 31 gives an entity a choice of accounting treatment for interests in jointly controlled entities, which makes it difficult to compare financial reports.
The objective of the project is to improve the accounting for, and the quality of the information being reported about, what the proposed IFRS defines as joint arrangements—which include joint operations, joint assets and joint ventures.
Where are we in the project?
At the April 2008 Board Meeting the staff presented a summary of the comment letters received in response to the Exposure Draft ED 9 Joint Arrangements. Based on the feedback obtained from the comment letters, the broad consultation performed by the staff subsequently to the comment letter presentation to the Board and the analysis of real contractual agreements, the Board started its redeliberations in May 2009 on the areas of the ED where modifications are considered necessary with the aim of publishing the final standard in the first quarter of 2010. The full project summary document includes information about the tentative decisions reached by the Board at the Board meetings held in May and June 2009.
Estimated project completion
An IFRS, IFRS X Joint Arrangements, is expected to be published in the first quarter of 2010.