Separate Financial Statements of a Venturer

25. A venturer should prepare and disclose its interest in a joint venture in its separate financial statements in accordance with the cost method.

Consolidated Financial Statements of a Venturer

26. Where a venturer is to consolidate its financial statements, the venturer should report in its consolidated financial statements its interest in a jointly controlled entity using the equity method.

27. A venturer should discontinue the use of the equity method from the date on which it ceases to have joint control over or clases to maintain significant influence on a jointly controlled entity.

Exceptions to the Equity method:

28. A venturer should account for the following interests in accordance with the cost method:

(a) an interest in a jointly controlled entity which is acquired and held exclusively with a view to its subsequent disposal in the near future, normally 12 months; and

(b) an interest in a jointly controlled entity which operates under severe long-term restrictions that significantly impair its ability to transfer funds to the venturer.

29. The use of the equity method is inappropriate when the interest in a jointly controlled entity is acquired and held exclusively with a view to its subsequent disposal in twelve months. It is also inappropriate when the jointly controlled entity operates under severe long-term restrictions which significantly impair its ability to transfer funds to the venturer.

30. From the date on which a jointly controlled entity becomes a subsidiary of a venturer, the venturer accounts for its interest in accordance with VAS 25, Consolidated Financial Statements and Accounting for Investments in Subsidiaries.

Transactions between a Venturer and a Joint Venture

31. When a venturer contributes or sells assets to a joint venture, recognition of any portion of a gain or loss from the transaction should reflect the substance of the transaction.