• IAS 31, Financial Reporting of Interests In Joint Ventures

History

• Issued November 1998
• Effective date: Annual financial periods beginning on or after 1 January 1999

SIC 13 clarifies the circumstances in which the appropriate portion of gains or losses resulting from a contribution of a non-monetary asset to a jointly controlled entity (JCE) in exchange for an equity interest in the JCE should be recognised by the venturer in the income statement.

SIC 13 indicates that under IAS 31.39, recognition of gains or losses on contributions of non-monetary assets is appropriate unless:

(a) the significant risks and rewards related to the non-monetary asset are not transferred to the jointly controlled entity;
(b) the gain or loss cannot be measured reliably; or
(c) similar assets are contributed by the other venturers.

Non-monetary assets contributed by venturers are similar when they have a similar nature, a similar use in the same line of business and a similar fair value. A contribution meets the similarity test only if all significant component assets included in the contribution are similar to each of the significant component assets contributed by the other venturers. A gain should also be recognised if, in addition to the equity interest in the jointly controlled entity, the venturer receives consideration in the form of either cash or other assets which are dissimilar to the non-monetary assets contributed