The International Accounting Standards Board (IASB) spells out the reporting requirements for joint arrangements in IFRS 11, a section of the international tax code that received a narrow-scope update in December 2017. The amended standards, which go into effect in January 2019 but may be applied right away if desired, specify how a company with a previous joint arrangement measures its interest in the other business when it gains joint control. If you have clients in joint arrangements, here is what you need to know about the update to IFRS 11.

The code defines a joint arrangement as one in which decisions affecting the return of the arrangement require a unanimous consensus from both parties in the arrangement. For accounting purposes, IFRS 11 requires each business in a joint arrangement to account for its share of the arrangement’s assets and liabilities, and record its portion of revenues and expenses in accordance with international standards.

The December 2017 update applies to businesses that previously held an interest in a joint venture and then gained joint control of the arrangement. The amendment states that a business in that situation is not required to remeasure its previously held interest in the arrangement. This contrasts with IFRS 3, a separate section of the code stating that acquirers in business combinations that gain full control of the business must then remeasure their interest.

By staying on top of the ever-evolving IFRS accounting standards, including the recently released updates, you can ensure your clients remain in compliance and don’t face reporting issues.