Page 14 - UNISA Test 2 Slides - Joint Arranagemenst (Finac2)

JOINT ARRANGEMENTS

Types of Joint Arrangements

• Contractual agreement

• May be consistent with rights and obligations conferred by

legal form (B25)
• May be used by the parties to reverse or modify rights and

obligations conferred by legal form (B26)

• Refer to table of examples of terms in B27

• Facts and circumstances (B29 – B32)

• Other terms may change nature of arrangement

• Example:

• Legal form creates separate entity with rights and obligations
• Arrangement only permitted to sell output to parties to
arrangement

• Sales price determined by cost of inputs
• Liabilities of arrangement in substance settled by parties to
arrangement

• Only source of cash flow

• Parties are effectively responsible for liabilities of arrangement
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