Sale of output by a joint operator (IFRS 11)

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20 May 2019 PDF
Categories Revenue

The IFRS Interpretations Committee AD clarifies a joint operator recognizes revenue only to the extent of the transfer of output to customers.

During the implementation of IFRS 15 Revenue from Contracts with Customers, the IFRS Interpretations Committee was asked how a joint operator (as defined in IFRS 11 Joint Arrangements) accounts for output arising from a joint operation when the output it receives in a reporting period differs from the output to which it is entitled. In March 2019, the Committee issued an agenda decision (AD) concluding that, in the fact pattern described, the joint operator recognizes revenue only to the extent that it depicts the transfer of output to its customers in each reporting period (i.e., revenue recognized applying IFRS 15). This means, for example, the joint operator does not recognize revenue for the output to which it is entitled, but that it has not received from the joint operation and sold.