Wiley IFRS: Practical Implementation Guide and Workbook, 3rd Edition

Chapter 22

INTERESTS IN JOINT VENTURES (IAS 31)

SCOPE

The Standard applies to accounting for interests in joint ventures and the financial reporting of assets, liabilities, income, and expenses of the joint ventures in the accounts of the venturers.

It does not apply to investments in jointly controlled entities held by venture capital organizations, mutual funds, unit trusts, and other similar entities or items that are accounted for at fair value through profit and loss or classified as held-for-trading under IFRS 9 and IAS 39.

A venturer does not have to apply proportionate consolidation or the equity method in these circumstances:

1. Where the interest is classified as held for sale under IFRS 5.

2. Where a parent is exempt from preparing consolidated financial statements by IAS 27. In the separate financial statements prepared by the parent, the investment in the jointly controlled entity may be accounted for by the cost method or under IFRS 9 and IAS 39.

3. If all four of the following apply:

a. The venturer is a wholly owned subsidiary or a partially owned subsidiary by another entity and its owners have been informed and do not object to the venturer not applying proportionate consolidation or the equity method.

b. The venturer’s debt or equity capital is not traded on a public market.

c. The venturer has not filed nor is filing its financial statements with a security commission for the purpose of issuing any class of financial instrument.

d. The ultimate or intermediate ...