Document ID: chunk:federal_register_of_legislation:F2019C00335:body:0:p16
Version: federal_register_of_legislation:F2019C00335
Segment Type: other
Provision Reference: 
Character Range: 43468–46387

for the generation of cash flows and, thus, the parties have an obligation to fund the settlement of the liabilities of entity C.
• The fact that the parties have rights to all the output produced by entity C means that the parties are consuming, and therefore have rights to, all the economic benefits of the assets of entity C.
These facts and circumstances indicate that the arrangement is a joint operation. The conclusion about the classification of the joint arrangement in these circumstances would not change if, instead of the parties using their share of the output themselves in a subsequent manufacturing process, the parties sold their share of the output to third parties.
If the parties changed the terms of the contractual arrangement so that the arrangement was able to sell output to third parties, this would result in entity C assuming demand, inventory and credit risks. In that scenario, such a change in the facts and circumstances would require reassessment of the classification of the joint arrangement. Such facts and circumstances would indicate that the arrangement is a joint venture.

B33 The following flow chart reflects the assessment an entity follows to classify an arrangement when the joint arrangement is structured through a separate vehicle:

Financial statements of parties to a joint arrangement
(paragraphs 21A–22)

Accounting for acquisitions of interests in joint operations
B33A When an entity acquires an interest in a joint operation in which the activity of the joint operation constitutes a business, as defined in AASB 3, it shall apply, to the extent of its share in accordance with paragraph 20, all of the principles on business combinations accounting in AASB 3, and other Australian Accounting Standards, that do not conflict with the guidance in this Standard and disclose the information required by those Australian Accounting Standards in relation to business combinations. The principles on business combinations accounting that do not conflict with the guidance in this Standard include but are not limited to:
(a) measuring identifiable assets and liabilities at fair value, other than items for which exceptions are given in AASB 3 and other Australian Accounting Standards;
(b) recognising acquisition-related costs as expenses in the periods in which the costs are incurred and the services are received, with the exception that the costs to issue debt or equity securities are recognised in accordance with AASB 132 Financial Instruments: Presentation and AASB 9;[1]
(c) recognising deferred tax assets and deferred tax liabilities that arise from the initial recognition of assets or liabilities, except for deferred tax liabilities that arise from the initial recognition of goodwill, as required by AASB 3 and AASB 112 Income Taxes for business combinations;
(d) recognising the excess of