IFRS Monitoring Committee
Knowledge Sharing on [Draft] International
Financial Reporting Standards
Exposure Draft:Accounting
Proposed amendments to IFRS 11
1
Exposure Draft:
Acquisition of an Interest in
a Joint Operation
Accounting Framework: Qualitative
Characteristic of Accounting
Information –Reliability,
Relevance, and Comparability.
Comment Letter
FAP
Thailand
Role of FAP in Global Arena
ED/2012/7 Acquisition of an Interest in a Joint Operation is a Proposed Amendment
to IFRS11 (2011) Joint Arrangements.
Thailand
… 2009 2011 2013 2013+
Issuance Date: TAS31 (2009)
Interests in Joint Ventures
Effective Date: TAS31 (2009)
Interests in Joint Ventures
Dynamic in Accounting Profession
3
Issuance Date: IFRS11 (2011) Joint
Arrangements; IFRS12 (2011) Disclosure of
Interests in Other Entities; IAS28
(2011) Investments in Associates and
Joint Ventures
Effective Date: IFRS11 (2011) Joint
Arrangements; IFRS12 (2011) Disclosure of
Interests in Other Entities; IAS28
(2011) Investments in Associates and
Joint Ventures
ED/2012/7 Acquisition of an Interest in a Joint
Operation
Comment LetterDeadline
IFRS Monitoring Committee
IAS27
(2011)
• Separate Financial Statements
•Subsidiaries•Associates•Joint Ventures
IAS28
(2011)
• Investments in Associates and Joint Ventures
•Associates•Joint Ventures
IFRS10
(2011)
• Consolidated Financial Statements
•Subsidiaries
IFRS11
(2011)
• Joint Arrangements
•Joint Operations
•Joint Ventures
IFRS12
(2011)
• Disclosure of Interests in Other Entities
•Subsidiaries•Associates•Joint Ventures
4
•Joint Ventures •Joint Ventures•Joint
Operations
Subsidiaries Subsidiaries Subsidiaries
Associates Associates Associates
Joint Ventures Joint Ventures Joint Ventures Joint Ventures
Joint
Operations
Joint
Operations
Joint
Operations
Joint
Operations
ED
IFRS11 (2011)
Joint Arrangement s
Effective on 01-01-2013
2001
2003
2011
1 2
IFRS11 (2011)
Joint ArrangementS
Effective on 01-01-2013
1. Joint Operation
Revised Classification
Scheme
2. Joint Venture
IFRS Monitoring Committee
TAS 31 (2009) Interests in Joint Ventures:
Types of Joint Venture
IAS 31 defines a joint venture as a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control.
1• Jointly
Controlled Operations
2• Jointly
Controlled
7
A joint venture is a contractual arrangement whereby two or more parties undertakean economic activity that is subject to joint control. These are of three types:• Jointly controlled operations
• Jointly controlled assets
• Jointly controlled entities.
Joint control exists only when the strategic financial and operating decisions relating to the economic activity require the unanimous consent of the parties sharing control.
2 Controlled Assets
3• Jointly
Controlled Entities
Revised Classification
Scheme
IFRS Monitoring Committee
PROPORTIONATE CONSOLIDATION – LINE-BY-LINE
• ASSETS• Current Assets
• Cash (CashJVR + �%CashJCE)• A/R (A/RJVR + �%A/RJCE)• Inventory (InventoryJVR + �%InventoryJCE)
PROPORTIONATE CONSOLIDATION – SEPARATE LINE
• ASSETS• Current Assets
• Cash (CashJVR)• A/R (A/RJVR)• Inventory (InventoryJVR)• Current assets in jointly controlled entities (�%CA )
� LINE-BY-LINE PRESENTATION � SEPARATE LINE PRESENTATION
IAS28 (2011) eliminates the proportionate consolidation option for investment in joint venture (jointly controlled entity for IAS31(2009).
8
• Noncurrent Assets• PPE (PPEJVR + �%PPEJCE)
• LIABILITIES• Current Liabilities
• A/P (A/PJVR + �%A/PJCE)• N/P (N/PJVR + �%N/PJCE)
• Noncurrent Liabilities• B/P (B/PJVR + �%B/PJCE)
• EQUITY• EJVR
• Current assets in jointly controlled entities (�%CAJCE)• Noncurrent Assets
• PPE (PPEJVR)• Noncurrent assets in jointly controlled entities
(�%NCAJCE)• LIABILITIES
• Current Liabilities• A/P (A/PJVR)• N/P (N/PJVR)• Current liabilities in jointly controlled entities (�%CLJCE)
• Noncurrent Liabilities• B/P (B/PJVR)• Noncurrent liabilities in jointly controlled entities
(�%NCLJCE)• EQUITY
• EJVR
IFRS Monitoring Committee
Joint Operator
Joint Operation
Joint Venturer
Joint Venture
Accounting for Joint Operator
The objective of the proposed amendment is to introduce guidance
on the accounting, by a joint operator, for the acquisition of an interest in a joint operation, as defined in IFRS11
Joint Arrangements, in which the activity of the joint operation
constitutes a business, as defined in IFRS3 Business Combinations.
…the activity of the joint operation constitutes
a business….
IFRS3 Business Combinations
Limited Scope Project
INPUTB
U
S
10
PROCESS
OUTPUT
S
I
N
E
S
S
Basis for Conclusions
❶
❷
❸
Diversity in practices related to the acquisition of interest in a joint operations
Basis for Conclusions
GoodwillGoodwill
CostsCosts
DTA & DTLDTA & DTL
IFRS3 vs. Others
Gain on bargain purchase
IAS12
Area omitted by both IAS31
and IFRS11.
Relevant principles in IFRS3
Basis for Conclusions
Misstatement of assets and liabilities
Inconsistency in partial application of
IFRS3
Impairment of assets may result in the future.
Basis for Conclusions
Limited scope project, not a major change in principle.
Basis for Conclusions
Prospective (as opposed to retrospective) application is proposed to avoid hindsight bias.
A
L
REV
REV
EXP
Details on relevant principles on business combinations accounting Details on relevant principles on business combinations accounting are discussed in B33A-B33B.
EXP
Amendment proposed:
IFRS3 application
Fair value
measurement
IFRS13 (2011)
Acquisition-related
costs
Deferred tax assets
and liabilities
Goodwill
∆IFRS3 (2009)
Unidentifiable intangible assets
Early adoption
is permitted
Prospective
application
Fair value
measurement
Prospective
Application
IFRS Monitoring Committee
IFRS3 application �
�
IFRS Monitoring Committee
Application to the acquisition of an interest in a joint operation on its formation �
�
IFRS Monitoring Committee
Prospective application �
�
IFRS Monitoring Committee
23
