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    Chapter 4 - Joint Arrangements-PROFE01

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    Steffany Roque
    This document defines joint arrangements and how they are accounted for under PFRS. It begins by defining a joint arrangement as one where two or more parties have joint control as stipulated contractually. It distinguishes between a joint operation, where parties have rights to assets and obligations for liabilities, and a joint venture, where parties have rights to net assets. For joint operations, a joint operator recognizes its share of assets, liabilities, revenues, expenses, and provides accounting considerations when separate records are or aren't maintained for the joint operation.

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    Chapter 4 - Joint Arrangements-PROFE01

    Uploaded by

    Steffany Roque
    315 views6 pages
    This document defines joint arrangements and how they are accounted for under PFRS. It begins by defining a joint arrangement as one where two or more parties have joint control as stipulated contractually. It distinguishes between a joint operation, where parties have rights to assets and obligations for liabilities, and a joint venture, where parties have rights to net assets. For joint operations, a joint operator recognizes its share of assets, liabilities, revenues, expenses, and provides accounting considerations when separate records are or aren't maintained for the joint operation.

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    ACCOUNTING

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    This document defines joint arrangements and how they are accounted for under PFRS. It begins by defining a joint arrangement as one where two or more parties have joint control as stipulated contractually. It distinguishes between a joint operation, where parties have rights to assets and obligations for liabilities, and a joint venture, where parties have rights to net assets. For joint operations, a joint operator recognizes its share of assets, liabilities, revenues, expenses, and provides accounting considerations when separate records are or aren't maintained for the joint operation.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    315 views6 pages

    Chapter 4 - Joint Arrangements-PROFE01

    Uploaded by

    Steffany Roque
    This document defines joint arrangements and how they are accounted for under PFRS. It begins by defining a joint arrangement as one where two or more parties have joint control as stipulated contractually. It distinguishes between a joint operation, where parties have rights to assets and obligations for liabilities, and a joint venture, where parties have rights to net assets. For joint operations, a joint operator recognizes its share of assets, liabilities, revenues, expenses, and provides accounting considerations when separate records are or aren't maintained for the joint operation.

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    © All Rights Reserved
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    of 6

    PROFE01-ACCOUNTING FOR SPECIAL TRANSACTIONS

    Chapter 4 - Joint Arrangements

    Learning Objectives

    Define a joint arrangement and state its characteristics.

    Identify whether a joint arrangement constitutes a joint operation or a joint venture.

    Account for joint operations.

    Describe the accounting for joint ventures.

    Joint Arrangement

    • PFRS 11 defines a joint arrangement as “an arrangement of which two or more parties
    have joint control.”

    Characteristics of a joint arrangement

    1. The parties are bound by a contractual arrangement.

    2. The contractual arrangement gives two or more of those parties joint control of the
    arrangement.

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    PROFE01-ACCOUNTING FOR SPECIAL TRANSACTIONS

    • Joint control is “the contractually agreed sharing of control of an arrangement, which


    exists only when decisions about the relevant activities require the unanimous consent
    of the parties sharing control.” (PFRS 11)

    Types of Joint Arrangements

    1. 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.

    2. 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.

    Joint operations

    Financial reporting by joint operators

    A joint operator shall recognize in relation to its interest in a joint operation:

    1. its assets, including its share of any assets held jointly;

    2. its liabilities, including its share of any liabilities incurred jointly;

    3. its revenue from the sale of its share of the output arising from the joint operation;

    4. its share of the revenue from the sale of the output by the joint operation; and

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    PROFE01-ACCOUNTING FOR SPECIAL TRANSACTIONS

    5. Its expenses, including its share of any expenses incurred jointly.

    Accounting for joint operation transactions

    • Separate accounting records may or may not be required for the joint operation itself and
    financial statements may or may not be prepared for the joint operation. However, the
    joint operators may prepare management accounts so that they may assess the
    performance of the joint operation.

    • The following are considerations in accounting for joint operations:

    1. No separate records are maintained for the joint operation

    2. Separate records are maintained for the joint operation

    No separate records are maintained – management account

    Separate records are maintained

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    PROFE01-ACCOUNTING FOR SPECIAL TRANSACTIONS

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    PROFE01-ACCOUNTING FOR SPECIAL TRANSACTIONS

     Notable differences between the provisions of the full PFRSs and the PFRS for SMEs:

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    PROFE01-ACCOUNTING FOR SPECIAL TRANSACTIONS

     Notable differences between the provisions of the full PFRSs and the PFRS for SMEs:

    To know more information about – Chapter 4- Joint Arrangement

    PLEASE CLICK THE LINK: https://www.youtube.com/watch?v=EFERTdQ_x_o

    To know more information about – Chapter 4- Types of Joint Arrangements

    PLEASE CLICK THE LINK: https://www.youtube.com/watch?v=SVXkOGLIong

    Reference:

    TEXTBOOK-Millan, Accounting for Special Transactions (2018), Philippines: Bandolin


    Enterprise

    WEBSITE REFERENCES-http://www.iasplus.com/

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