20120911 isern effect analysis IFRS 11 joint arrangements

International Financial Reporting StandardsThe views expressed in this presentation are those of the presenter, not necessarily those of the IFRS Foundation or the IASB Joint Arrangemen

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International Financial Reporting Standards

The views expressed in this presentation are those of the presenter,

not necessarily those of the IFRS Foundation or the IASB

Joint Arrangements and

Related Disclosures

Effect analysis 2011

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Effect analysis – Aspects considered

Joint venture activity (slides 3-4)

2

Financial statement effects (slides 5-7)

Cost-benefit analysis (CBA) (slide 8)

Convergence with US GAAP (slide 9)

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Joint venture activity:

(1): Sources: Thomson Financial SDC Platinum Alliances/Joint Ventures database – Sviatoslav A Moskalev, R Bruce Swensen

Joint Ventures around the globe from 1990-2000: Forms, types, industries, countries and ownership patterns

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Joint venture activity: structures2 4

(2): Sources: Thomson Financial SDC Platinum Alliances/Joint Ventures database – Sviatoslav A Moskalev, R Bruce Swensen

Joint Ventures around the globe from 1990-2000: Forms, types, industries, countries and ownership patterns

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Financial statement effects: current accounting methods3 5

(3): Source: KPMG IFRG Limited and Dr Isabel von Keitz The Application of IFRS: Choices in Practice – December 2006

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Financial statement effects: overview of the effects 6

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Financial statement effects: other effects analysed 7

The Effect analysis document also considers:

•Effects on the entities’ financial statements (ie statement of financial

position, statement of comprehensive income, statement of changes in equity, statement of cash flows)

•Effect of the accounting change on return on capital and its

components (ie profitability, assets turnover and financial leverage)

•Effects expected on the arrangements analysed during the outreach

which covered different industries

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Cost-benefit analysis (CBA) 8

The areas identified as the areas that will represent the highest costs

and benefits for those entities affected by the implementation of

IFRS 11 are as follows:

•Classification of the types of joint arrangement

•Transition provisions

•Additional disclosures

Overall assessment is that the benefits brought by IFRS 11 will

outweigh its related costs

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US GAAP Convergence

Joint arrangements

structured through

a separate vehicle

Joint arrangements

not structured

through a separate

vehicle

• Differences in the definitions of ‘joint arrangement’ and ‘joint control’ will still

persist

Corporations

Unincorporated entities

Convergence will increase but differences will remain for arrangements whereby the parties have rights to the assets and obligations for the liabilities.

Accounting for specialised industries will probably fully converge Accounting for the other industries might not converge

Accounting for entities’ undivided interests in assets and liabilities will continue to converge, but there will be no convergence for specific industries in which the parties having undivided interests may apply the equity method under US GAAP

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Questions or comments?

Expressions of individual

views by members of the

IASB and

its staff are encouraged

The views expressed in this

presentation are those of the

presenter Official positions

of the IASB on accounting

matters are determined only

after extensive due process

and deliberation.

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