Joint arrangements

In this lesson

1. 0:00 Introduction to joint arrangements
2. 0:31 Joint operations vs joint ventures
3. 1:51 Accounting for joint operations
4. 3:34 Accounting for joint ventures
5. 5:05 Worked example: joint operation accounting

About this lesson

Joint arrangements occur when two or more parties share contractual control over an operation, and the accounting treatment depends entirely on the structure: if there's no separate entity, it's a joint operation (accounted for line by line); if a separate entity is created, it's a joint venture (accounted for using the equity method). Understanding this distinction is essential for correctly recognising your share of assets, liabilities, revenues, and expenses in group financial statements. You'll explore the practical differences between joint operations and joint ventures through worked examples. For joint operations, you'll learn to recognise your proportionate share of assets and liabilities directly in your financial statements, applying IFRS 3 principles where acquisitions occur. For joint ventures, you'll apply equity method accounting, similar to associates. The lesson includes a detailed worked question showing how to calculate a company's share of profit from a joint operation, including depreciation and finance costs on provisions for dismantling obligations—a common exam scenario that tests your understanding of both the classification and the detailed mechanics of recognition and measurement.

Duration: 8m