PFRS 11 — Joint Arrangements

Nature

Joint arrangements

A joint arrangement is an arrangement of which two or more parties have joint control.

A joint arrangement has the following characteristics:

 the parties are bound by a contractual arrangement, and

 the contractual arrangement gives two or more of those parties joint control of the
arrangement.

A joint arrangement is either a joint operation or a joint venture.

Recognition
A joint venturer recognises its interest in a joint venture as an investment and shall account for that
investment using the equity method in accordance with PAS 28 Investments in Associates and Joint
Ventures unless the entity is exempted from applying the equity method as specified in that standar

Presentation and disclosure

In general terms, the special transitional adjustments are required to be applied at the beginning of the
immediately preceding period (rather than the the beginning of the earliest period
presented). However, an entity may choose to present adjusted comparative information for earlier
reporting periods, and must clearly identify any unadjusted comparative information and explain the
basis on which the comparative information has been prepared
PFRS 12 — Disclosure of Interests in Other Entities

Nature

Interest in another entity

Refers to contractual and non-contractual involvement that exposes an entity to variability of

returns from the performance of the other entity. An interest in another entity can be
evidenced by, but is not limited to, the holding of equity or debt instruments as well as other
forms of involvement such as the provision of funding, liquidity support, credit enhancement
and guarantees. It includes the means by which an entity has control or joint control of, or
significant influence over, another entity. An entity does not necessarily have an interest in
another entity solely because of a typical customer supplier relationship.

Structured entity

An entity that has been designed so that voting or similar rights are not the dominant factor in
deciding who controls the entity, such as when any voting rights relate to administrative tasks
only and the relevant activities are directed by means of contractual arrangements.

Recognition

An investment entity that prepares financial statements in which all of its subsidiaries are
measured at fair value through profit or loss presents the disclosures relating to investment
entities required by PFRS 12.

Disclosure and Presentation

The disclosure requirements of PFRS 12 need not be applied for any period presented that begins before
the annual period immediately preceding the first annual period for which pFRS 12 is applied

Entities are encouraged to voluntarily provide the information required by PFRS 12 prior to its adoption.
Providing some of the disclosures required by PFRS 12 does not compel an entity to comply with all of
the requirements of the PFRS
PFRS 13 — FAIR VALUE MEASUREMENT

Nature

Fair value of an asset:

It is the price that would be received to sell an asset in an orderly transaction between market
participants

Fair value of liability:

The price that would be paid to transfer a liability in an orderly transaction between market
participants

a. Fair value refers to an “exit price” or market price under current market conditions at
measurement date
b. Fair value is the price in an orderly transaction
c. Fair value is the price agreed upon by market participants

Market participants

a. Independent or unrelated parties

b. Knowledgeable or having a reasonable understanding of the transaction
c. Willing or motivated but not forced and compelled to enter into the transaction

Transaction

Valuation premise:

The entity can also estimate the fair value by using a valuation method
The fair value shall not be adjusted for transaction cost

Highest and best use:

Use of the nonfinancial asset by market participants that would maximize the value of asset

a. Physically possible – it reflects the physical characteristics of an asset

b. Legally permissible – it reflects any legal restrictions on the use of the asset
c. Financially feasible – It reflects whether the use would generate sufficient income or cash flows

Valuation Method:

a. Market approach - uses prices and relevant information for market transactions for identical
and comparable asset and liability
b. Income approach – Focuses on converting future amounts into discounted cash flows
c. Cost approach – Relies on the current replacement cost to replace the asset with a comparable
asset