Question $2$

A$.$ Two entities, Dromo and Shidaa $($the parties$)$ set up a scparate entity $($East Mall$)$ for the purpose of acquiring and operating a shopping centre. The contractual arrangement between the parties establishes joint control of the activities that are conducted in East Mall. The main feature of East Mall's legal form is that the entity has rights to the assets, and obligations for the liabilities, relating to the arrangement. The terms of the contractual arrangement are such that:

East Mall owns the shopping centre. The contractual arrangement does not specify that the parties have rights to the shopping centre.

The parties are not liable in respect of the debts, liabilities or obligations of East Mall. If East Mall is unable to pay any of its debts or other liabilities or to discharge its obligations to third parties, the liability of each party to any third party will be limited to the unpaid amount of that party's capital contribution.

The parties have the right to sell or pledge their interests in East Mall.

Each party receives a share of the income from operating the shopping $($which is the rental income net of the operating costs$)$ in accordance with its interest in East Mall.

Required

With reference to the relevant International Accounting Standard, explain how East Mall should be classified and how to account for East Mall in the books of the parties.

$(6$ marks$)$