Question

Question 7                                                                                                             

Barry Ltd and Jones Ltd decided to jointly undertake the manufacture of an electric car. They jointly formed Silver Ltd, which will manufacture the car. Barry Ltd and Jones Ltd provide the various resources for the manufacture of the car, which is assembled by Silver Ltd.

Barry Ltd and Jones Ltd each hold 50% of the voting rights in Silver Ltd and receive 50% of the cars produced by Silver Ltd. Barry Ltd and Jones Ltd then sell the cars in their own geographic region. The constitution of Silver Ltd requires that the operations of the company must be in accordance with a business plan prepared annually, and to which both Barry Ltd and Jones Ltd both agree. Silver Ltd has six directors, with three being appointed by Barry Ltd and three by Jones Ltd.

Required

Evaluate whether a joint arrangement exists and support your answer with justifications.

Answer 1

SOLUTION

For joint arrangement there must be control which must be equall exersiced by all parties of joint arrangement . According to IFRS11 sTATE THAT THERE ustT BE JOINT CONTROL TO FORM JPINT ARRANGEMENT .

tHE PPRESENCE OF JOINT CONTROL IS MEASURE OF JOIMT AGREEMENT .

MEANING OF JOINT CONTRL

Joint comtrol is contractulal agreed share of control of an arrangement which exist only when when decesion about relevent activity equireunimous contro of parties sharing control . thus it mean collective control where no single party control but control is excercise equally .

Here voting rights are 50% belonging to each party thus both are controlling the decesion equally makes it a jpint arrangement in nature of operations .

NOTE PLEASE DO UPVOTE IT SHALL BE A REAT FAVOUR .