The objective of this standard is to prescribe the accounting policies and procedures in

The objective of this standard is to prescribe the accounting policies and procedures in relation to interests in joint ventures, including the forms of joint venture, and venturers’ separate financial statements and consolidated financial statements for their bookkeeping and financial reporting purposes.

accounting-services-in-vietnam202. This Standard should be applied in accounting for interests in joint ventures including jointly controlled operations, jointly controlled assets and jointly controlled entities.

03. The following terms are used in this Standard with the meanings specified:

A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity which is subject to joint control. Jointly controlled activities referred to herein include

– business cooperation contract involvement in the form of jointly controlled operations;

– business cooperation contract involvement in the form of jointly controlled assets;

– joint venture contract involvement in the establishment of jointly controlled entities.

Control is the power to govern the financial and operating policies of an economic activity relating to interests in joint ventures so as to obtain benefits from it.

Joint control is the power to jointly govern the financial and operating policies of an economic activity on a contractual basis.

Significant influence is the power to participate in the financial and operating policy decisions of an economic activity but is not control or joint control over those policies.

A venturer is a party to a joint venture and has joint control over that joint venture.

accounting-services-in-vietnam1An investor in a joint venture is a party to a joint venture and does not have joint control over that joint venture.

The equity method is a method of accounting and reporting whereby an interest in a jointly controlled entity is initially recorded at cost and adjusted thereafter for the post acquisition change in the venturer’s share of net assets of the jointly controlled entity. The income statement reflects the venturer’s share of the results of operations of the jointly controlled entity.

The cost method is a method of accounting and reporting whereby an interest in a jointly controlled entity is initially recorded at cost and kept unadjusted thereafter for the post acquisition change in the venturer’s share of net assets of the jointly controlled entity. The income statement only reflects the venturer’s share of the net accumulated profits of the jointly controlled entity arising as from the contribution date.