Jointly controlled asset or jointly controlled entity?
If three entities A, B and C each own one-third of a pipeline (and enter into a contractual agreement giving each party joint control), the venture is a jointly controlled asset. If, however, A, B and C each own one-third of a fourth entity D which owns the pipeline (and enter into a contractual agreement giving each party joint control), the venture is considered to be a jointly controlled entity.
This suggests that a venturer’s share of the output of an asset may be accounted for differently depending on whether the share in the asset is held directly or through a separate legal entity, particularly when it is borne in mind that IAS 31 gives an exemption in respect of accounting for a jointly controlled entity, but not in respect of a jointly controlled asset.
However, it could be said that these different outcomes are no different to the fact that, if a company owns a property, it shows a property in its separate financial statements whereas, if it incorporates a subsidiary to hold the property, it shows an investment in subsidiary in its separate financial statements.