The joint venture: the equity method

Learning objectives

• Explain that a joint venturer accounts for its interest as an investment using the equity method in accordance with IAS 28.L1
• Calculate the carrying amount of a joint venture after the share of profit or loss, the share of other comprehensive income and dividends.L2, L3
• Record the share of profit and a dividend received from a joint venture.L2, L3

Normative references

• IFRS 11 §24A joint venturer recognises its interest in a joint venture as an investment and accounts for it using the equity method in accordance with IAS 28, unless it is exempted from applying that method.

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

4 questions

• A joint venturer accounts for its interest in a joint venture by including, line by line, its share of the joint venture's assets and liabilities in its own financial statements.L1
• Solis SA holds {venturer_percent} of a joint venture accounted for using the equity method. Carrying amount at the beginning of the year: {opening_carrying_amount}. During the year, the joint venture reports a profit of {jv_profit}; Solis's share of its other comprehensive income is {share_of_oci}; Solis receives {dividends_received} in dividends (case data). Case convention: no fair value adjustment or goodwill, no impairment. Calculate the share of profit and the closing carrying amount of the interest.L2
• Delta SA holds {venturer_percent} of a joint venture that it accounts for using the equity method. The joint venture distributes {total_dividend_declared} in dividends, which Delta collects to the extent of its share (case data). Case convention: the dividend is collected on the day it is paid. Record the entry for the dividend received by Delta.L2
• Where are the disclosures about the nature, extent and financial effects of an entity's interests in joint arrangements found?L3