Which of the following is not considered when classifying a joint arrangement as a joint venture or a joint operation?
A. Whether the legal form of the separate vehicle gives the parties rights to the assets and obligations for the liabilities relating to the arrangement
B. Whether the joint arrangement is structured through a separate vehicle
C. Whether the terms of the contractual agreement give the parties rights to the assets and obligations for the labilities relating to the agreement
D. Whether the terms of the contractual arrangement specify that annual distributions to the parties are required
D. Whether the terms of the contractual arrangement specify that annual distributions to the parties are required.
When classifying a joint arrangement as a joint venture or a joint operation, the criteria that is not considered is whether the terms of the contractual arrangement specify that annual distributions to the parties are required. According to the guidance in the accounting standards, the classification of a joint arrangement depends on factors such as the legal form of the separate vehicle and the terms of the contractual agreement in terms of how they govern the distribution of rights to assets and obligations for the liabilities related to the arrangement, not on the specifics of profit distributions.
