Liabilities in Relation to a Joint Operator’s Interest in a Joint Operation (IFRS 11)

The Committee received a request about the recognition of liabilities by a joint operator in relation to its interest in a joint operation (as defined in IFRS 11). In the fact pattern described in the request, the joint operation is not structured through a separate vehicle. One of the joint operators, as the sole signatory, enters into a lease contract with a third-party lessor for an item of property, plant and equipment that will be operated jointly as part of the joint operation’s activities. The joint operator that signed the lease contract has the right to recover a share of the lease costs from the other joint operators in accordance with the contractual arrangement to the joint operation.