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IFRS 11 — Acquisition of an interest in a joint operation

Background

The Interpretations Committee was asked whether the acquirer of interests in joint operations (as as defined in IFRS 11 Joint Arrangements) should apply the principles in IFRS 3 Business Combinations on initial recognition of the interest or whether the acquirer should instead account for it as the acquisition of a group of assets.

The Interpretations Committee concluded that the most appropriate approach to account for the acquisition of an interest in a joint operation that is a business was to apply the relevant principles for business combinations in IFRS 3 and other IFRSs.

The Interpretations Committee recommended to the IASB that new guidance, as part of a limited-scope project, was developed on IFRS 11 on accounting for the acquisition of an interest in a joint operation as defined in IFRS 11, in circumstances in which the activity of the joint operation constitutes a business as defined in IFRS 3 (a joint operation that is a business) on the basis of the business combinations guidance in IFRS 3 and other IFRSs.

The new guidance would only address the accounting for an interest in a joint operation when the joint operation is formed and there is an existing business that is contributed or where the acquisition of the interest is in an existing joint operation that is a business.

The limited-scope project will not address the accounting for an interest in a joint operation when the joint operation is formed and this coincides with the formation of the business.  Given the expected timing of finalisation of the project, accounting for the acquisition of interests under IAS 31 Interests in Joint Ventures is also not expected to be considered in this project.

 

Current status of the project

The IASB published Exposure Draft ED/2012/7 Acquisition of an Interest in a Joint Operation (Proposed Amendment to IFRS 11) on 13 December 2012.  Finalised amendments are expected in the second quarter of 2014.

 

Project milestones

DateDevelopmentComments
September 2012 Tentatively added to the IASB agenda The IFRS Interpretations Committee recommended adding this project to the agenda
13 December 2012 ED/2012/7 Acquisition of an Interest in a Joint Operation (Proposed Amendment to IFRS 11) published Comment deadline 23 April 2013

Related Discussions

  • IFRS Interpretations Committee issues

  • Mar 21, 2014

  • The Board was presented several issues stemming from recent discussions of the IFRS Interpretations Committee, the majority of which related to cross-cutting issues on investment entities. Some issues were follow-up issues from the February Board meeting.

  • IFRS Interpretations Committee issues

  • Jan 23, 2014

  • The IASB discussed specific questions related to Paper 12-A 'Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28)', Paper 12-B 'Proposed Elimination of gains from ‘downstream’ transactions', and Paper 12-C 'Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11)'.

  • IFRS 3 — Acquisition of control over a joint operation

  • Sep 10, 2013

  • The Committee received a request to clarify whether a previously held interest in the assets and liabilities of a joint operation is re-measured to the fair value, on obtaining control over a joint operation.

  • Due process documents (IASB only)

  • Nov 20, 2012

  • The Board agreed that all due process requirements were met for exposure drafts on amendments to IFRS 10/IAS 28 and amendments to IFRS 11.

  • IFRS 11 — Acquisition of an interest in a joint operation

  • Mar 13, 2012

  • The IFRS Interpretations Committee discussed their proposed IFRS 11 amendment wording, specifically, they applied a ' general reference approach' to provide a general reference to the principles of business combination accounting and related disclosure requirements in IFRS 3 and other IFRSs.

  • IFRS 11 — Acquisition of interest in joint operation

  • Jan 17, 2012

  • The IFRS Interpretations Committee asked the staff to develop a possible amendment to IFRS 11 'Joint Arrangements' effectively saying if the acquisition of an interest in a joint operation constitutes a business under IFRS 3, IFRS 3 should be applied in the accounting for the acquisition of interests in jointly controlled operations or assets.

  • IFRS 11 – Acquisition of interest in joint operation (continuing)

  • Nov 04, 2011

  • The IFRS Interpretations Committee continued its discussion of a request to clarify the applicability of IFRS 3 by (1) joint operators for the acquisition of interests in joint operations under IFRS 11 and (2) venturers for the acquisition of interests in jointly controlled operations or assets under IAS 31, when the activity of the joint operation or the activity of the jointly controlled operation or assets constitutes a business as defined in IFRS 3.

  • IFRS 11 – Acquisition of interest in joint operation (continuing)

  • Sep 09, 2011

  • The IFRS Interpretations Committee continued discussions on whether the acquisition of an interest in a joint arrangement should trigger the application of IFRS 3 'Business Combinations', considering a staff recommended that application guidance for IFRS 11 be developed.

  • IFRS 11 – Acquisition of interest in a joint operation (new)

  • Jul 08, 2011

  • The IFRS Interpretations Committee considered a request to clarify the accounting by venturers for the acquisition of interests in joint operations when the activities and assets underlying the jointly controlled operations or assets, or the joint operation, constitute a business.