CERTYNEX IFRS ACADEMY

Saturne SA is a party, with another company, to a joint arrangement structured through a separate vehicle. Its management argues, to classify it as a joint operation, that the arrangement was designed to supply it with the output, that it needs that output and that it has bought it for several years. No clause or fact gives it enforceable rights to the assets or legal or constructive obligations for the vehicle's liabilities (case facts). What is concluded in light of the Interpretations Committee's 2014-2015 decision?

These elements are enough to classify the joint arrangement as a joint operation, the design of the arrangement and Saturne's needs revealing the parties' rights to the assets.

Saturne's past practice creates constructive obligations for the vehicle's liabilities, which justifies on its own classification as a joint operation.

These elements are not enough: only enforceable rights to assets or legal or constructive obligations for liabilities found the classification.

The Committee's decision added a requirement to classify as a joint venture, which management must apply to any joint arrangement whose output is not sold to third parties.