Other facts and circumstances

Learning objectives

• Analyse whether other facts and circumstances (output intended for the parties, reliance on cash flows from the parties) give the parties rights to the assets and obligations for the liabilities.L2, L3
• Justify classification as a joint operation based on other facts and circumstances by citing the element of the case that creates the rights and obligations.L3

Normative references

• IFRS 11 §B30A joint arrangement structured through a vehicle whose legal form separates the parties from the vehicle, and whose contractual terms do not specify rights to the assets and obligations for the liabilities, may nevertheless be classified as a joint operation when other facts and circumstances give the parties such rights and obligations.
• IFRS 11 §B31When the activities of an arrangement are primarily designed to provide output to the parties, this indicates that the parties have rights to substantially all the economic benefits of the arrangement's assets; the parties often ensure this access by preventing the arrangement from selling the output to third parties. B32 draws the consequence for the liabilities: since they are, in substance, satisfied by the cash flows the parties pay when purchasing the output, they are an obligation of the parties when the parties are, in substance, the only source of those cash flows.
• IFRS 11 §B32An arrangement designed in this way (output provided to the parties) has the effect that its liabilities are, in substance, satisfied by the cash flows received from the parties through their purchases of the output; when the parties are substantially the only source of cash flows contributing to the continuity of its operations, this indicates that they have an obligation for the liabilities of the arrangement (example 5).

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

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