US-CN Companies & Securities Law Assignment

Joint Arrangement 1. What is a joint arrangement? A joint arrangement is an arrangement of which two or more parties have joint control. A joint arrangement has the following characteristics: (a) The parties are bound by a contractual arrangement (see paragraphs B2–B4). (b) The contractual arrangement gives two or more of those parties joint control of the arrangement (see paragraphs 7–13). A joint arrangement is either a joint operation or a joint venture. 2. What is meant by joint control? See AASB 11/IFRS 11 para 3 and Appendix A. 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. The key element of joint control is the sharing of control. In other words, there must be at least two investors who have shared control of the investee. 3. How does joint control differ from control as used in classifying subsidiarie...

Associates and Joint Ventures 1. What is an associate entity? Paragraph 3 of AASB 128/IAS 28 defines an associate as: • an entity over which the investor has significant influence. The key criterion is the existence of significant influence, also defined in para. 3 defined as: • The power to participate in the financial and operating policy decisions of the investee but is not control or joint control of those policies. Note that an investor does not have to necessarily hold shares in an associate – yet the application of the equity method depends on such a shareholding. However, refer to the presumptions in para 6 of AASB 128/IAS 28. 2. Why are associates distinguished from other investments held by the investor? The suite of accounting standards provides different levels of disclosure dependent on the relationship between the investor and the investee: • Subsidiaries: a control relationship (AASB 10). • Joint ventures: a joint control relationship (AASB 11). • A...