Joint Venture - Indirect Holding

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yvonne
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Joined: 23 Jun 2020, 04:51

Joint Venture - Indirect Holding

Post by yvonne »

Hi all, I would like to ask your professional advices on this issue:

- A has a 49% share in a joint venture, X.
- X has 2 100%-owned subsidiaries, Y and Z.

In X's perspective, I understand that X needs to consolidate its subsidiaries, Y and Z.
In A's perspective, A will account for X using equity method when preparing its consolidated FS.

Questions:
What about A's indirect holding in Y and Z? Since A indirectly owns 49% of Y and Z, should A treat Y and Z as joint ventures or associates when preparing its consolidated FS?
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Marek Muc
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Re: Joint Venture - Indirect Holding

Post by Marek Muc »

Hi, for sure the equity accounting in A's consolidated financial statements should be based on consolidated data of X, as discussed here:
https://ifrscommunity.com/knowledge-bas ... s-a-parent

and I would say that Y a Z are A's joint ventures as well. If A has joint control over X, and X controls Y and Z, then by definition A has joint control over Y and Z.
yvonne
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Joined: 23 Jun 2020, 04:51

Re: Joint Venture - Indirect Holding

Post by yvonne »

Thanks Marek.

So in A's Consolidated Balance Sheet, it will have Investment in Joint Ventures (X,Y and Z) and share 49% of post-acquisition change in their (X,Y and Z) net assets, right?
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Marek Muc
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Re: Joint Venture - Indirect Holding

Post by Marek Muc »

I would still say that the investment shown in the balance sheet is in X only, and the share in X's P&L is based on its consolidated data, i.e. including Y and Z
yvonne
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Joined: 23 Jun 2020, 04:51

Re: Joint Venture - Indirect Holding

Post by yvonne »

As far as I understand, basically the carrying amount of investment in Joint Venture = investment cost in X + A's share of post-acquisition profit/OCI of X group?
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Marek Muc
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Re: Joint Venture - Indirect Holding

Post by Marek Muc »

yes, less:
- dividends and other capital distributions of X
- imapirment
yvonne
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Re: Joint Venture - Indirect Holding

Post by yvonne »

Thanks Marek! I think I have more confidence to deal with this JV now :D
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Marek Muc
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Re: Joint Venture - Indirect Holding

Post by Marek Muc »

great! Post back if you come across any interesting issues :)
JRSB
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Re: Joint Venture - Indirect Holding

Post by JRSB »

From memory this company has something similar, See note 9 of accs. JV with further subs (also with NCI etc)...

https://find-and-update.company-informa ... ng-history
yvonne
Posts: 23
Joined: 23 Jun 2020, 04:51

Re: Joint Venture - Indirect Holding

Post by yvonne »

JRSB wrote: 04 May 2021, 20:00 From memory this company has something similar, See note 9 of accs. JV with further subs (also with NCI etc)...

https://find-and-update.company-informa ... ng-history
Thanks! It helps my FS disclosure
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