BC7 IAS 31 established different accounting requirements depending on whether the arrangements were structured through an entity. Jointly controlled operations and jointly controlled assets were arrangements that did not require the establishment of an entity or financial structure that is separate from the parties. IAS 31 required parties to these arrangements to recognise assets, liabilities, revenues and expenses arising from the arrangements. When arrangements were structured through an entity, IAS 31 classified them as jointly controlled entities. Parties with interests in jointly controlled entities accounted for them using proportionate consolidation or, as an alternative, the equity method.

BC8 The problem with basing different accounting requirements solely on the existence of an entity, combined with the choice of accounting treatment for jointly controlled entities, was that some arrangements that gave the parties similar rights and obligations were accounted for differently and, conversely, arrangements that gave the parties different rights and obligations were accounted for similarly. The Board's policy is to exclude options in accounting treatment from accounting standards whenever possible. Such options can lead to similar transactions being accounted for in different ways and, therefore, can impair comparability.