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IFRS 11 — Joint Arrangements

Effective date:

Fiscal years beginning on or after January 1, 2013, except for subsequent amendments. Earlier application of IFRS 11 is permitted if IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities, IAS 27 Separate Financial Statements (as amended in 2011) and IAS 28 Investments in Associates and Joint Ventures(as amended in 2011) are applied at the same time.

Published by the IASB:

May 2011

Included in Part I of CPA Canada Handbook:

September 2011

Reach out to our IFRS 11 Specialist

Martin Roy

Overview

IFRS 11 Joint Arrangements outlines the accounting by entities that jointly control an arrangement. Joint control involves the contractually agreed sharing of control and arrangements subject to joint control are classified as either a joint venture (representing a share of net assets and equity accounted) or a joint operation (representing rights to assets and obligations for liabilities, accounted for accordingly).

The core principle of IFRS 11 is that a party to a joint arrangement determines the type of joint arrangement in which it is involved by assessing its rights and obligations and accounts for those rights and obligations in accordance with that type of joint arrangement.

Joint Arrangements

A joint arrangement is an arrangement of which two or more parties have joint control and has the following characteristics:

  • the parties are bound by a contractual arrangement, and
  • the contractual arrangement gives two or more of those parties joint control of the arrangement.

A joint arrangement is either a joint operation or a joint venture:

  • 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.
  • 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.

Classifying joint arrangements

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. An entity determines the type of joint arrangement in which it is involved by considering the structure and form of the arrangement, the terms agreed by the parties in the contractual arrangement and other facts and circumstances.

Financial statements of parties to a joint arrangement

A joint operator accounts for the assets, liabilities, revenues and expenses relating to its involvement in a joint operation in accordance with the relevant IFRSs.

A joint venturer recognizes its interest in a joint venture as an investment and shall account for that investment using the equity method in accordance with IAS 28 Investments in Associates and Joint Ventures unless the entity is exempted from applying the equity method as specified in that standard.

History of IFRS 11

The following table shows the history of this standard subsequent to the adoption of IFRS in Canada. 

Date1

Development

Comments

Included in

Part I of the CPA Canada Handbook2

May 12, 2011

IFRS 11, Joint Arrangements issued

 

This new standard improves on IAS 31 Interests in Joint Ventures by establishing principles that are applicable to the accounting for all joint arrangements.

This new standard is effective for annual periods beginning on or after January 1, 2013. Earlier application of IFRS 11 is permitted if IFRS 10, IFRS 12, IAS 27 (as amended in 2011) and IAS 28 (as amended in 2011) are applied at the same time. An entity is encouraged to provide information required by IFRS 12 Disclosure of Interests in Other Entities earlier than annual periods beginning on or after January 1, 2013.

September 2011

June 28, 2012

Amended by Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance

 

Paragraphs C1B and C12A-C12B have been added and paragraphs C2-C5, C7-C10 and C12 have been amended to provide similar clarifications to the amendments to the transition guidance in IFRS 10.

These amendments are effective for annual periods beginning on or after January 1, 2013. Earlier application is permitted.

September 2012

May 6, 2014

Amended by Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11)

 

IFRS 11 Joint Arrangements has been revised to incorporate amendments issued by the International Accounting Standards Board (IASB) in May 2014. The amendments add new guidance on how to account for the acquisition of an interest in a joint operation that constitutes a business.

The amendments are effective for annual periods beginning on or after January 1, 2016. Earlier application is permitted.

July 2014

December 12, 2017

Amended by Annual Improvements to IFRSs 2015 – 2017 Cycle (obtaining joint control of a business that is a joint operation)

The amendment to IFRS 11 clarifies that when an entity obtains joint control of a business that is a joint operation, the entity does not remeasure previously held interests in that business. 

The amendment is effective for annual periods beginning on or after January 1, 2019. Earlier application is permitted.

April 2018

Notes

  1. For further details of relevant developments prior to this, please refer to our Deloitte Global section
  2. Newly issued, amended or revised IFRSs are part of Canadian GAAP only after they are approved by the Accounting Standards Board in accordance with its due process.

The above summary does not include details of consequential amendments made as the result of other projects.

Related Interpretations

  • None

Related IFRIC Agenda Rejection Notices

The rejection notices are available in our Deloitte Global section.

  • IFRS 11 — Classification of joint arrangements: application of "other facts and circumstances" (March 2015)
  • IFRS 11 — Classification of joint arrangements (May 2014)
  • IFRS 10 & IFRS 11 — Transition provisions in respect of impairment, foreign exchange and borrowing costs (November 2013)

AcSB’s IFRS Discussion Group meetings

  • September 13, 2016 - IFRS 11: Interests of "Other Parties" to a Joint Operation and IFRS 3 and IFRS 11: Definition of a Business and Accounting for Previously Held Interests
  • May 31, 2016 - IFRS 3 and IFRS 11:  Remeasurement of Previously Held Interests – Obtaining Control or Joint Control in a Joint Operation that Constitutes a Business
  • May 31, 2016 - IFRS 10 and IFRS 11: Accounting for Loss of Control Transactions
  • December 9, 2014 - IFRS 11: Joint Arrangements
  • September 11, 2014 - IFRS 11: Application Issues and Process of IFRS Interpretations Committee
  • June 12, 2014 - IFRS 11: Accounting for Changes in Classification between Joint Ventures and Joint Operations and IFRS 11: Application Issues

Amendments under consideration

  • The IASB has signalled an intention to conduct a post-implementation review of IFRS 11, commencing in 2016.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.