Question

Question 15. In accordance with IFRS 11 Joint Arrangements, which of the following statements is false?

A joint venture can be accounted using either equity accounting or proportionate consolidation in the consolidated financial statements

Investors A Co, B Co, C Co and D Co each hold 25% of Pilot Co. The shareholder agreement specifies that, for a decision to be passed, 75% of the voting rights must consent. It does not stipulate which parties must agree. A Co, B Co, C Co and D Co have joint control

A joint operator accounts for its share of assets, liabilities, income and expenses of a joint operation in accordance with the relevant IFRS

A joint arrangement that is not in substance a separate entity must be accounted for as a joint operation

Answer 1

Answer

False Statement is:

Investors A Co, B Co, C Co, and D Co each hold 25% of Pilot Co. The shareholder agreement specifies that, for a decision to be passed, 75% of the voting rights must consent. It does not stipulate which parties must agree. A Co, B Co, C Co, and D Co have joint control.

Reason: An entity is not automatically a joint arrangement because two or more parties hold equal shares in it. Here Pilot Co. is not jointly controlled. The standard refers to this as a collective control.