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    Joint Arrangement

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    CINDY BALANON

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    © All Rights Reserved
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    Joint Arrangement

    Uploaded by

    CINDY BALANON
    2 views2 pages

    Copyright

    © © All Rights Reserved

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    Download as docx, pdf, or txt
    2 views2 pages

    Joint Arrangement

    Uploaded by

    CINDY BALANON

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Joint Arrangement Financial reporting by joint operators

    A joint operator shall recognize in


    “an arrangement of which two or more parties relation to its interest in a joint operation:
    have a joint control” 1. Its assets, including its share of any
    assets held jointly;
    Characteristics: 2. Its liabilities, including its share of any
    1. Parties are bound by a contractual liabilities incurred jointly;
    arrangement. 3. Its revenue from the sale of its share of
    This arrangement distinguishes it from the output arising from the joint
    other types of investments(PFRS 9, PAS 28, PFRS operation;
    3&10). The interest is contractually agreed. 4. Its share of the revenue from the sale of
    the output by the join operation; and
    2. Contractual arrangement gives two or more 5. Its expenses, including its share of any
    of those parties joint control of the expenses incurred jointly.
    arrangement. The joint operator shall recognize its own
    assets, liabilities, income, and expenses, and its
    Joint control share in joint operations’ assets, liabilities,
    “the contractually agreed sharing of income, and expenses.
    control of an arrangement, which exists only
    when decisions about the relevant activities Accounting for joint operation transactions
    require the unanimous consent of the parties
    sharing control.”  Separate accounting records may or may
    - it exists when all the parties sharing not be required for the joint operation
    control over the arrangement act collectively or itself and financial statements may or may
    together in directing the activities that not be prepared for the joint operation.
    significantly affects the returns of the  However, the join operators may prepare
    arrangement. Unanimous consent means that management accounts so that they may
    there must be consent of all the parties. assess the performance of the joint
    operation.
    Types of Joint Arrangements:  The following are considerations in
    1. Joint Operation - parties that have joint accounting for joint operations:
    control of the arrangement have rights to the 1. No separate records are maintained for the
    assets and obligations for the liabilities, relating joint operation
    to the arrangement. They are called joint 2. Separate records are maintained for the joint
    operators. operation

    A. NO SEPARATE RECORDS MAINTAINEDMANAGEMENT ACCOUNT


    Joint operation transactions are recorded in each of the individual books of the joint
    operators.

     If credit balance - Profit


     If debt balance - Loss
     Unsold merchandise or ending inventory is placed on the credit side to reflect cost of goods sold.
     Personal accounts are used.
    Eg., Receivable from a joint operator, Payable to joint operator
     One or more join operators may as the manager/s are usually paid management fee/s
     Management fees are treated as expense by the joint operation and as income by the manager.
     The manager records any asset (other than merchandise) and any liability he receives/incurs on
    behalf of the joint operation using regular accounts but labeled as ‘JO’
    E.g., JO - Cash, JO - AR, JO - AP

    B. SEPARATE RECORDS MAINTAINED - MANAGEMENT ACCOUNT


    The joint operation transaction are recorded in those separate books in the regular manner
     The joint operators record only their own transactions in their respective books

    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. They are called joint venturers.

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