Joint Ventures

Date recorded:

The project team recommended that the research project address the following issues:

  • the structure of joint ventures;
  • the substance of joint ventures and the effect of legal form on the substance;
  • the definition of a joint venture;
    • the concept of joint control;
    • contractual arrangements as the basis for joint ventures; and
    • the concept of an entity;
  • the appropriate method of accounting by venturers for interests in joint ventures; and
  • disclosures by venturers about interests in joint ventures.

In addition the following issues would be researched:

  • types of instruments giving effect to the joint arrangements;
  • structures used for the joint arrangements;
  • commercial and legal drivers for the choice of particular structures;
  • the substance of joint arrangements and the effect of form on the substance;
  • control of assets and responsibility for liabilities;
  • nature of the investor's participation in the joint arrangement; and
  • the accounting treatment of joint arrangements by the venturers.

There was general agreement with the approach.

In addition the research team was asked to consider what steps could be taken to promote convergence in the near term given a leaning on the part of the IASB to remove the proportional consolidation option in IAS 31.

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