TABLE OF CONTENTS FRS 9 Associates and Joint Ventures recognizes two types of joint arrangement.
IAS 31 Interests in Joint Ventures recognizes three categories of joint arrangement.
Jointly controlled operations
A well-documented example of such an arrangement is when several entities collaborate in the construction of an aircraft.
One venturer might produce the engines, another the internal fittings and so on. In UK terms this would equate to a JANE as each participant uses their own assets and incurs their own costs; there is no separate entity that could stand-alone and trade independently.
Each entity will record its own costs, whilst shared costs and proceeds from the sale of the aircraft will be split under the terms of the contractual arrangement agreed at the outset.
Jointly controlled assets
This is when two or more venturers share the cost of constructing an asset that will benefit and be used by all of them. An oil pipeline used to transport crude oil from a distant oilfield might be shared by several companies as the cost of building a unique pipeline for each individual company would be prohibitive.
The accounting treatment would again be similar to a JANE with each venturer taking an agreed share of the cost to their own financial statements.
Jointly controlled entity
As implied by the name this is a discrete entity that operates inde pendently but is controlled by two or more other parties. As with the joint venture described for UK GAAP this requires the prepara- tion...
