Group Accounts - Joint Arrangements & DIsclosure of interest in other entities Flashcards
What is Joint control?
The contractually agreed sharing of control of an agreement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control
What are the criteria(s) when looking for joint control?
- Atleast two parties (can be >2)
2.Contractual agreement ( terms by which parties participate in activity) - Joint Control: Unanimous consent to direct
What are the 2 classifications of joint arrangement?
Joint operations
Joint ventures
What is a joint operation?
Joint arrangements where the parties that have joint control have rights to the assets and obligations for the liabilities
What is a joint venutre
Joint arrangements where the parties that have joint control have rights to the net assets of the arrangement
Which of the 2 classifications of Joint arrangement does not require consolidation?
Joint operation, as the respective joint operators have their asset/liabilities in their own entity
How is Joint Operations accounted for?
No group accounting
Individual statements:
SOFP- Asset, liabilities they own.
share of any assets/liabilities incurred jointly
SOCI - Revenue from sale of output (Either sold by joint operator or share of output sold by the joint operation.
Expenses they own, share of any expenses jointly
How is Joint Ventures (JV) accounted for?
Each JV uses equity accounting for their interest in the JV in consolidated/ group financial statements
CSOFP:
Investment in Joint Venture (Similar to associate)
Shown in NCA
Investment in JV = cost of investment + Group% of JV post-acquisition profits
Reserves: Show Group % of JV’s psot-acquisition reserves
SOCI: In IS, show the group% of JV’s profit after tax ‘ share of profits of the joint venture.
In OCI section shows Group % of JV’s OCI
