JOINT ARRANGMENTS UNDER AASB11

I. New terminology * AASB11 introduces the term ‘joint arrangement’. A joint arrangement is an arrangement under which two or more parties have joint control. * A joint arrangement has the following characteristics: * The parties are bound by a contractual arrangement * The contractual arrangement gives two or more of those parties joint control of the arrangement.

Difference: Under AASB 131 the term ‘joint venture’ was used to describe all joint arrangements, now it is used to describe a type of joint arrangement.

II. New Classification: AASB 11 classifies joint arrangements into two types: * Joint operation: A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement (i.e. joint operators) have rights to the assets, and obligations for the liabilities, relating to the arrangement. * Joint ventures: A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement (i.e. joint venturers) have rights to the net assets of the arrangement.

III. Guidance for Classification of JO and JV: depends upon the rights and obligations of the parties to the arrangement. When assessing the parties' rights and obligations arising from the arrangement, it is necessary to consider the following: 1. The structure of the joint arrangement 2. When the joint arrangement is structured through a separate vehicle (i.e. entity): * Legal form of the separate vehicle * Terms of the contractual arrangement * When relevant, other facts and circumstances
Guidelines:

* No separate vehicle=> JO * The contractual arrangement often describes the nature of the activities that are the subject of the arrangement and how the parties intend to undertake those activities together. For