The Board continued its deliberations on the proposals in the exposure draft ED 9 Joint Arrangements.
The Board tentatively decided that Jointly Controlled Entities (JCEs) will transition from proportionate consolidation to the equity method, by aggregating at their respective carrying values the proportionate consolidated assets and liabilities into a single line item. The investment will need to be tested for impairment in accordance to IAS 36 Impairment of Assets at the date at which the standard is applied, and at the corresponding comparative periods.
The Board also had a preliminary discussion relating to the transitional provisions for JCEs that will have to transition their accounting from the equity method to the accounting for shares of assets and liabilities. The Board reached no decisions on this issue, but, they stated that the objective for these transitional provisions should be for an entity to account for the (shares of) assets and liabilities retrospectively.
The Board tentatively decided:
- to align the disclosure objectives for joint arrangements and associates;
- not to require disclosure of the basis of joint control;
- to require a list and description of investments in individually-material joint arrangements and associates;
- to require that an entity discloses commitments relating to its joint arrangements, including its share of commitments incurred jointly with other parties;
- to require an entity to disclose contingent liabilities relating to its joint arrangements and associates, including its share of contingent liabilities incurred jointly with other parties or investors;
- not to require summarised financial information for joint operations;
- that the summarised financial information to be presented for joint ventures and associates should be the same, independently of the measurement method by which the joint venture or associate is being accounted for; and
- to align the disclosure of information relating to the fact that a joint venture or associate is not accounted for using the equity method, and to provide the fair value of investments in joint ventures and associates for which there are published price quotations.
The Board also had a preliminary discussion relating to the aggregation and level of detail of the summarised financial information required for joint ventures and associates. The Board reached no decisions on this issue.
The Board will continue its discussion at future meetings, with the aim of publishing an IFRS in the second quarter of 2010.