IAS-31 – Interests in Joint Ventures

A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control. These are of three types:

(i) Jointly controlled operations: It should be recognised by the venturer by including the assets and liabilities that it controls and the expenses that it incurs and its share of the income that it earns from the sale of goods or services by the venture.

(ii) Jointly controlled assets: It should be recognised as follows:

(a) its share of the jointly controlled assets, classified according to the nature of the assets;

(b) any liability that it has incurred;

(c) its share of any liabilities incurred jointly with the other venturers in relation to the joint venture;

(d) any income from the sale or use of its share of output of the joint venture;

(e) any expenses that it incurred in respect of its interest in the joint venture.

(iii) Jointly controlled entities: It may maintain its own accounting records and prepares and presents financial statements in the same way as other entities in conformity with International Financial Reporting Standard.