We understand the specialized markets in which you operate and provide tailored solutions to meet your unique business needs.
Our comprehensive suite of business services combines industry expertise, market knowledge and professional insights.
MNP is a leading national accounting, tax and business consulting firm in Canada.
Suite 2000, 330 5th Ave. S.W.
MNP careers are Different by Design. As an entrepreneurial firm, we truly believe there are no limits to where your career can go.
Private enterprises operating within the real estate and construction sector often invest in projects in which joint control is shared by investors, commonly referred to as joint ventures.
ASPE Section 3055 Interests in Joint Ventures previously applied to such investments, however new ASPE Section 3056 Interests in Joint Arrangements comes into effect for year-ends beginning on or after January 1, 2016.
ASPE 3055 allowed private enterprises to account for all joint ventures using the equity method (or cost or proportionate consolidation methods), regardless of the nature of the joint venture.
Under new ASPE 3056, private enterprises can no longer choose to apply the equity or cost method for Joint Arrangements (JAs), unless they meet the definition of a Jointly Controlled Enterprise. If an investor’s JAs do not meet the definition, and the equity or cost method is being applied, the investor must change its accounting method upon application of ASPE 3056. Alternatively, if the investments in the JAs are structured differently, the investor could potentially elect to apply the cost or equity method.
Under ASPE 3056, Jointly Controlled Assets and Jointly Controlled Operations must be accounted for by the investor recognizing its share of the JA’s assets, liabilities, revenues and expenses. For Jointly Controlled Enterprises, the investor has the choice of applying the cost or equity method. The investor in a Jointly Controlled Enterprise also has a third choice to perform further analysis (of legal form, contractual terms, and other factors) and recognize its share of the JA’s assets, liabilities, revenues and expenses if it is determined that the investor has an interest in individual assets, liabilities and operations, as opposed to an interest in the net assets, of the Jointly Controlled Enterprise.
A Jointly Controlled Enterprise is defined as a joint arrangement that involves the establishment of a partnership, corporation or other enterprise in which each investor has an interest (i.e., a separate investment vehicle). The enterprise operates in the same way as other enterprises, except that a contractual arrangement between the investors establishes joint control over the economic activity of the enterprise. ASPE 3056 does not require the “enterprise” to be a separate legal entity.
Jointly Controlled Operations involve the use of the assets and resources of the investors, rather than establishment of a corporation, partnership or other enterprise, or financial structure.
Jointly Controlled Assets involve joint control, and often the joint ownership, by the investors of one or more assets contributed to, or acquired for the purpose of, the joint arrangement and dedicated to the purpose of the joint arrangement.
Investors in JAs, should contact their professional advisors to discuss which classification of JA under new ASPE 3056 will apply to their investments, as well as what options exist regarding changes in accounting method, or changes in investment structure.
For more information, contact Bruno Lucente, CPA, CA, at 416.515.3807 or email@example.com.
Find an office near me