More CEOs in Entertainment & Media (E&M) than in any other sector expect to form a new strategic alliance or joint venture in the coming year. And 57% - compared to 39% across all industries - expect the majority of their innovations to be co-developed with partners outside their organisations. This forecast increase in the scale and scope of joint ventures will expose more media companies to accounting complexities such as distinguishing between supplier arrangements, jointly controlled operations and jointly controlled entities; the treatment of net liabilities in a joint venture; retranslation of foreign joint ventures; and the contribution of assets and knowledge into a joint venture.
This paper, the first in a series of guides from PwC's Media Industry Accounting Group, explains the treatment of these and other items under the current standard IAS31 Interests in joint ventures. We also consider how the treatment might change under IFRS 11 Joint arrangements which is applicable for periods beginning on or after 1 January 2013.