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CA Final · Financial Reporting · Ind AS 111 Joint Arrangements

Delta Ltd and Echo Ltd are two of three parties to a contractual arrangement. The facts show that no single party controls the arrangement, but Delta and Echo together direct the relevant activities and no other party can block their decisions. Which statement is most consistent with Ind AS 111's definition of a joint arrangement?

The arrangement is a joint arrangement because the definition requires only that two or more parties have joint control. It does not require every party to have joint control, equal interests, or a separate vehicle. Delta and Echo satisfy that requirement.

  1. AIt is not a joint arrangement because all three parties must have joint control
  2. BIt is a joint arrangement only if every party holds an equal share
  3. CIt is a joint arrangement only if it is structured through a separate vehicle
  4. DIt is a joint arrangement because two or more parties have joint control, even if not all parties to the arrangement doCorrect

Explanation

The Appendix A definition says a joint arrangement is an arrangement of which two or more parties have joint control. It does not require all parties to the arrangement to have joint control, nor equal shares, nor a separate vehicle. Hence Delta and Echo are in a joint arrangement under the definition.

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