To mark this momentous year for UK GAAP, I'm embarking on a mission to work my way through FRS 102, reading a portion on each working day of 2015 and writing a short blog entry on my thoughts and musings (be they few or many).
Day 56 (6 May)
Yesterday I discussed the treatment for jointly controlled operations (JCOs) within section 15 of the standard. It's a curious fact that tomorrow the UK public goes to the polls in what is widely expected to lead to a JCO of some description within Westminster. How's that for a cheesy topical link?
Today let's look at jointly controlled assets (JCAs). What's the difference between a JCO and a JCA?
Here's an analogy. The bank holiday on Monday was, for many of us, a lovely sunny day. Let's say you had made plans with friends for an all-age barbecue. One couple brings their state-of-the-art Weber barbecue, another family brings an inflatable pool and someone else brings the food. A fun time is had by all. This is a JCO - each family takes home ('accounts for') the assets they brought to the party, plus their share of the food and drink consumed (and hopefully no stomach bugs in the process).
Let's progress the scenario - these families find that they get on so well with each other that they decide to invest in a holiday cottage in the UK, each putting in a third of the purchase price. They have an agreement to share the benefits of the cottage, renting it out for any unused weeks, and will eventually receive a third of the sale proceeds when they eventually tire of the rain and sell up. They share out the usual running costs, but each family is responsible for rectifying any damage they cause while staying in the cottage.
This cottage is a JCA - owned and operated jointly by each family. Each owner accounts for (a) their share of the value of the cottage, (b) any individual repair costs they rack up, (c) their share of the general liabilities and expenses and (d) their share of the rental income.
Did that analogy work for you? More importantly, did it make you wish you were on holiday eating a large chargrilled steak? Me too.
P.S. If you missed the last instalment click here