IFRS 11 · Free study guide
IFRS 11 Joint Arrangements Summary
Last updated 13 September 2026 · Written by the AccountingTutorAI team · Reviewed by a qualified CPA (Canada)
Quick summary
IFRS 11 governs arrangements where two or more parties share control jointly rather than one party controlling alone. The standard's first job is classification: is this a joint operation, where each party has direct rights to the arrangement's assets and obligations for its liabilities, or a joint venture, where the parties instead have rights only to the net assets of a separate vehicle? Getting that classification right drives everything that follows — joint operators bring their own share of the arrangement's assets, liabilities, revenue and expenses onto their own statements, while joint venturers use the equity method under IAS 28 and never proportionately consolidate. IFRS 11 sits alongside IFRS 10 (control) and IAS 28 (significant influence) as the third leg of the group-accounting judgement: does the investor control, jointly control, or merely significantly influence the investee? For ACCA SBR, joint arrangement classification is one of the most common places a 50/50 shareholding is used to test whether candidates default to 'joint venture' without checking the underlying facts.
Joint control, and how it differs from control and significant influence
Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control (IFRS 11.7). Unlike control under IFRS 10, where one party has the unilateral ability to direct relevant activities, joint control requires every party sharing control to agree — a single dissenting joint controller can block a decision.
- Control (IFRS 10): one party has power to direct relevant activities on its own, plus exposure to variable returns
- Joint control (IFRS 11): two or more parties must unanimously agree before relevant activities can be directed — no single party can act alone
- Significant influence (IAS 28): the power to participate in policy decisions, without the power to jointly or unilaterally direct them
The two types of joint arrangement, and how to classify them
If the arrangement has no separate vehicle — the parties directly hold the assets and owe the liabilities themselves — it is always a joint operation. Where a separate vehicle exists (a company, partnership or similar structure), classification depends on the legal form of the vehicle, the terms of the contractual arrangement, and, where relevant, other facts and circumstances (IFRS 11.14–IFRS 11.19).
Even a separate vehicle can still be a joint operation if the facts and circumstances point that way — most commonly where the parties have agreed to take substantially all of the output of the arrangement and the vehicle depends on them to settle its liabilities as they fall due, meaning the parties are, in substance, funding the vehicle's obligations. A separate vehicle whose legal form gives the parties rights only to net assets is a joint venture unless these other facts and circumstances override that starting point.
Need the exact paragraph text? The AI Tutor quotes the official licensed IFRS Standards word-for-word.
Try the AI TutorHow each type is accounted for
A joint operator recognises its own assets, its own liabilities, and its share of any assets, liabilities, revenue and expenses held or incurred jointly — in both its separate financial statements and, where relevant, its consolidated financial statements (IFRS 11.20–IFRS 11.21). A joint venturer instead recognises its interest as a single investment and accounts for it using the equity method under IAS 28 (IFRS 11.24). Proportionate consolidation of a joint venture — bringing in a percentage share of the venture's assets and liabilities line by line — is not permitted.
Worked example: classifying and accounting for a 50/50 arrangement
Investor A and Investor B each hold 50% of Vehicle Co, a separate legal entity set up to manufacture a single component. The joint arrangement agreement requires unanimous consent for all key operating and financing decisions. Under an offtake agreement, A and B are contractually required to purchase substantially all of Vehicle Co's output at a price set to cover Vehicle Co's costs, and Vehicle Co has no other customers or independent means of settling its liabilities.
| Factor | Conclusion |
|---|---|
| Separate vehicle exists? | Yes — Vehicle Co is a distinct legal entity |
| Legal form alone | Suggests rights to net assets only (joint venture) |
| Other facts and circumstances | A and B take substantially all of Vehicle Co's output and fund its liabilities through the offtake pricing — this overrides the legal form |
| Classification | Joint operation |
The offtake and funding facts override the separate-vehicle presumption, so A and B each recognise their own share of Vehicle Co's assets, liabilities, revenue and expenses rather than a single equity-accounted investment.
| Account | Dr (CU) | Cr (CU) |
|---|---|---|
| Inventory / cost of production | 200,000 | |
| Cash / payables | 200,000 |
Because Vehicle Co is a joint operation and not a joint venture, A never shows a single 'investment in joint arrangement' line — instead A's own statements already contain its 50% share of the underlying costs, assets and liabilities, recognised as if A had incurred them directly. This is the opposite of the equity method, and mixing the two up — equity-accounting a joint operation, or proportionately consolidating a joint venture — is one of the most common IFRS 11 exam errors.
Test yourself: 5 IFRS 11 practice questions
1. Two parties agree that unanimous consent is required for all key decisions in an arrangement with no separate vehicle — the parties hold the arrangement's assets and owe its liabilities directly. How is this arrangement classified?
- A. Always a joint operation
- B. Always a joint venture
- C. It depends on the parties' shareholding percentages
- D. It cannot be a joint arrangement without a separate vehicle
Show answer
Correct answer: A
With no separate vehicle, the parties have direct rights to the assets and direct obligations for the liabilities, so the arrangement is always a joint operation — there is no legal-form or facts-and-circumstances test to apply. B is the opposite of the correct classification. C confuses joint arrangement classification with significant-influence thresholds, which do not apply here. D is wrong — a joint arrangement does not require a separate vehicle at all.
2. A joint arrangement is structured through a separate vehicle whose legal form gives the parties rights only to its net assets, and there are no other facts or circumstances that override this. How is it classified and accounted for?
- A. Joint operation; each party recognises its share of the vehicle's assets and liabilities directly
- B. Joint venture; each party recognises a single investment and applies the equity method
- C. Joint venture; each party proportionately consolidates its share of the vehicle's assets and liabilities
- D. Subsidiary; the party with operational involvement consolidates the vehicle
Show answer
Correct answer: B
Where the legal form gives rights to net assets and nothing overrides it, the arrangement is a joint venture, accounted for using the equity method under IAS 28. A misclassifies it as a joint operation. C describes proportionate consolidation, which IFRS 11 no longer permits for joint ventures. D is wrong — joint control, not control by one party, is the premise of the fact pattern.
3. What is required for joint control to exist under IFRS 11?
- A. Each party must hold an equal shareholding in the arrangement
- B. Decisions about the arrangement's relevant activities must require the unanimous consent of the parties sharing control
- C. At least one party must have the unilateral ability to direct the arrangement's activities
- D. The arrangement must be structured through a separate legal vehicle
Show answer
Correct answer: B
Joint control exists only when decisions about relevant activities need every party sharing control to agree. A is wrong — joint control does not require equal shareholdings, only a contractual sharing arrangement. C describes unilateral control (IFRS 10), the opposite of joint control. D is wrong — a joint operation can exist with no separate vehicle at all.
4. What does a joint operator recognise in its own financial statements?
- A. A single 'investment in joint operation' line, remeasured each period
- B. Its own assets and liabilities, plus its share of any assets, liabilities, revenue and expenses held or incurred jointly
- C. 100% of the arrangement's assets and liabilities, with a non-controlling interest for the other party's share
- D. Nothing, until the arrangement is dissolved and assets are distributed
Show answer
Correct answer: B
A joint operator recognises its own items directly, line by line, plus its share of jointly held or incurred items — there is no single investment line. A describes the joint venture (equity method) treatment. C describes full consolidation of a subsidiary, which does not apply to a joint operation. D is incorrect — recognition happens as the joint operation transacts, not only on dissolution.
5. Which of the following is no longer permitted for a party's interest in a joint venture under IFRS 11?
- A. The equity method under IAS 28
- B. Recognising a single investment in joint venture line
- C. Proportionate consolidation of the venture's assets and liabilities
- D. Testing the investment for impairment under IAS 36 via IAS 28
Show answer
Correct answer: C
IFRS 11 removed the previously permitted option of proportionately consolidating a joint venture's assets and liabilities; only the equity method (A, B and D all describe valid parts of that treatment) is now allowed for joint ventures.
Go deeper with Pro
Full IFRS 11 summary in the standards library
The complete in-app IFRS 11 summary — key points, a quick-reference panel and plain-English explanations — in the Pro standards library.
Unlock40 exam-style IFRS 11 practice MCQs with AI explanations
A 40-question quiz drawn from our 70-question IFRS 11 bank on joint control, classification, and the accounting for joint operations versus joint ventures, each with instant AI-graded feedback.
UnlockJoint operation or joint venture? classification decision tree
Work any shared arrangement through the separate-vehicle, legal-form and facts-and-circumstances questions to reach a defensible IFRS 11 answer.
UnlockJournal entry generator
Describe a joint operator's share of jointly incurred costs, or a joint venturer's equity-accounted share of profit, and get the Dr/Cr entries built for you.
UnlockAsk the AI Tutor
Paste a joint arrangement scenario and get the classification, the accounting treatment and the journals worked through with IFRS paragraph citations.
UnlockStudy IFRS 11 with an AI tutor
AI-tutored explanations, exam-style practice questions, and interactive decision trees. Free to start.
Start freeFrequently asked questions
What is the difference between a joint operation and a joint venture?
A joint operator has direct rights to the arrangement's assets and direct obligations for its liabilities, and recognises those items (plus its share of jointly held or incurred items) directly in its own statements. A joint venturer has rights only to the net assets of a separate vehicle, and recognises a single investment accounted for using the equity method.
What is joint control?
The contractually agreed sharing of control of an arrangement, which exists only when decisions about the arrangement's relevant activities require the unanimous consent of every party sharing that control.
Is proportionate consolidation allowed for joint ventures?
No. IFRS 11 removed that option — a joint venturer must use the equity method under IAS 28, recognising a single investment line rather than a percentage share of the venture's individual assets and liabilities.
How can a 50/50 arrangement still be classified as a joint operation?
Even where a separate vehicle exists, other facts and circumstances can override its legal form — most commonly where the parties take substantially all of the vehicle's output and are, in substance, obliged to fund its liabilities. Where that's the case, the arrangement is a joint operation regardless of the 50/50 shareholding.
How are joint ventures accounted for?
Using the equity method under IAS 28 — the same mechanics as an associate: the investment starts at cost and its carrying amount then moves with the venturer's share of the joint venture's profit or loss, less any dividends received.
Does IFRS 11 apply if there's no separate vehicle at all?
Yes — an arrangement with no separate vehicle is still a joint arrangement if joint control exists, and it is automatically classified as a joint operation, since the parties already have direct rights to the assets and direct obligations for the liabilities.