No separate vehicle: a joint operation

Learning objectives

• Determine that a joint arrangement not structured through a separate vehicle is a joint operation.L1
• Identify, from the facts of a case, whether a separate vehicle exists.L1, L2

Normative references

• IFRS 11 §B16A joint arrangement that is not structured through a separate vehicle is a joint operation: the contractual arrangement then establishes the parties' rights to the assets, and obligations for the liabilities, relating to the arrangement, and the parties' rights to the corresponding revenues and obligations for the corresponding expenses.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

3 questions

• A joint arrangement that is not structured through a separate vehicle is a joint operation.L1
• Rhône SA and Seine SA have joint control of a pipeline operation, governed by a contract that allocates the operation and the funding between them. No separate entity has been created to carry this operation (case facts). How is the joint arrangement classified?L2
• A colleague writes: "Without a separate vehicle, the North-South joint arrangement has no legal form to examine; we must therefore study its contractual terms and its other facts and circumstances before classifying it." What is the error in this reasoning?L2