CERTYNEX IFRS ACADEMY

A colleague writes: "A party that does not have joint control of a joint venture applies IFRS 9 to its interest; it does not have to look for whether it has significant influence." What is the error in this reasoning?

It forgets that the equity method is reserved for joint venturers, so a party without joint control must use cost for its interest.

It applies to the joint venture the rule for a joint operation, which requires the arrangement's assets and liabilities to be recognised line by line.

It makes the equity method depend on the percentage the party holds, without examining its influence over the joint venture's decisions.

It omits that the party applies IFRS 9 unless it has significant influence, in which case it applies IAS 28 and equity accounts its interest.