CERTYNEX IFRS ACADEMY

A colleague writes: "The joint arrangement is housed in a public limited company, whose assets belong to the company and not to the parties; it is therefore a joint venture, with no need to read the contractual arrangement." What is the error in this reasoning?

It ignores that a public limited company is a form that leads to a joint operation, the parties having rights to the company's assets.

It treats legal form as decisive, whereas the contractual terms and other facts and circumstances can modify it.

It forgets that ownership of the assets by the company gives the parties rights to those assets, which requires a joint operation.

It omits to apply the equity method to the joint arrangement first, in order to check the consistency of its classification as a joint venture.