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IFRS 11 Amendments - Acquisition of an Interest in a Joint Operation



Project History


The objective of the Exposure Draft ED/2012/7 Acquisition of an Interest in a Joint Operation (Proposed Amendment to IFRS 11) 'the ED' is to introduce guidance in IFRS 11 Joint Arrangements on how a joint operator should account for the acquisition of an interest in a joint operation in which the activity of the joint operation constitutes a business, as defined in IFRS 3 Business Combinations. Neither IFRS 11 nor IAS 31 Interests in Joint Ventures (which was superseded by IFRS 11) explicitly address this type of transaction.

The ED proposes to amend IFRS 11 so that a joint operator should apply the principles for business combinations accounting in IFRS 3 and other relevant IFRSs when accounting for the acquisitions referred to above.


EFRAG's Comment Letter


On 29 January 2013, EFRAG issued its draft comment letter on the ED. EFRAG agreed that diversity in practice existed on how joint operators account for acquisitions of interests in a joint operation whose activity constitutes a business. Therefore, EFRAG supported the IASB's efforts to address the issue. But EFRAG was concerned that considerable judgment was required in practice to distinguish a joint operation from a joint venture and that the ED left open a number of issues related to different aspects of acquisitions of interests in a joint operation.

On 17 April 2013, EFRAG published its final comment letter. EFRAG did not support the proposed amendments because the ED addressed the issue by focusing on a narrow set of circumstances and failed to address a number of important related issues.


The IASB's Final Guidance


On 6 May 2014, the IASB published the final Amendments. The final guidance included clarifications on several of the issues identified in the ED, such as the accounting for previously held interests when additional interest is acquired while joint control is maintained.


EFRAG's Invitation to Comment


On 16 June 2014, EFRAG issued an invitation to comment relating to the endorsement for use in the EU of the amendments to IFRS 11 Accounting for Acquisitions of Interests in Joint Operations. EFRAG's initial assessment was that the amendments to IFRS 11 satisfied the technical criteria for EU endorsement. Comments were requested by 16 July 2014.


EFRAG's Endorsement Advice


On 24 July 2014, EFRAG issued its Endorsement Advice and Effects Study Report relating to the Amendments for use in the European Union and European Economic Area. EFRAG supported the adoption of the Amendments and recommended its endorsement.

Latest Developments

On 25 November 2015, ​the European Union  published a Commission Regulation endorsing the amendments to IFRS 11 .


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