The Committee received a request to clarify the application of IFRS 3 by
- joint operators for the acquisition of interests in joint operations as defined in IFRS 11; and
- venturers for the acquisition of interests in jointly controlled operations or assets as specified in IAS 31 Interests in Joint Ventures.
In circumstances where the activity of the joint operation or the activity of the jointly controlled operations or assets constitutes a business, as defined in IFRS 3.
The Committee noted that the issue raised the question of what unit of account (the joint arrangement or the interest in the joint arrangement) is to be considered for the application of IFRS 3 and whether the activities and assets related to that unit of account can constitute a business. More specifically, the question is whether, and how, to recognise goodwill, if present, on the acquisition of an interest in a joint operation as defined in IFRS 11 or jointly controlled operations or assets as specified in IAS 31. The submitted example was that of the acquisition of an undivided interest in an oil or natural gas producing field.
The Committee directed the staff to do further analysis on this issue with the aim of assessing whether the issue could be solved through an annual improvement. The staff will present further analysis at the meeting in September 2011.