Financial Reporting · Ind AS 111 Joint Arrangements

Accounting for Joint Ventures and Separate Financial Statements (Ind AS 111 / Ind AS 28)

Updated 5 October 2026 · Fact-checked

A joint venture is a joint arrangement where the parties with joint control have rights to the net assets. A joint venturer uses the equity method (Ind AS 28) in consolidated statements unless an exemption applies. In separate statements it uses cost, Ind AS 109 or the equity method. Without joint control, Ind AS 109 or Ind AS 28 applies.

Understand Accounting for Joint Ventures and Separate Financial Statements

A joint arrangement is one where two or more parties have joint control. Joint control means decisions on relevant activities need the unanimous consent of the parties that share control. Ind AS 111 then splits arrangements into two types: joint operations and joint ventures.

In a joint venture, the parties with joint control have rights to the net assets of the arrangement. Usually the arrangement sits in a separate vehicle, and the legal form, contract terms and other facts show the parties have no direct rights to assets or obligations for liabilities. The parties are called joint venturers.

A joint venturer recognises its interest as an investment and accounts for it using the equity method under Ind AS 28. You start at cost. After that, the carrying amount goes up by your share of the investee's profit or loss, and your share of its other comprehensive income (OCI) is recognised in your OCI. Dividends received reduce the carrying amount. They are not income, because the profit has already been picked up.

Ind AS 28 exempts you from the equity method in some cases:

The investment is held by a venture capital organisation, mutual fund, unit trust or similar entity (including investment-linked insurance funds), and the entity elects, on initial recognition, to measure it at fair value through profit or loss under Ind AS 109. The exemption is an option. It is not automatic.
The investment is classified as held for sale. Ind AS 105 then applies.
You are a parent exempt from preparing consolidated financial statements under Ind AS 110, or you meet the Ind AS 28 conditions for an intermediate parent. All of these must hold: your other owners, including those not otherwise entitled to vote, have been informed and do not object; your debt or equity instruments are not traded in a public market; you have not filed, and are not filing, your financial statements to issue any class of instruments in a public market; and your ultimate or an intermediate parent produces consolidated financial statements, available for public use, that comply with Ind AS.

In separate financial statements (Ind AS 27), you account for the investment in the joint venture at cost, in accordance with Ind AS 109, or using the equity method as described in Ind AS 28. You must apply the same accounting to each category of investment. Under the cost model, dividends are recognised in profit or loss when your right to receive them is established.

A party that participates in a joint venture but does not have joint control is different. It accounts for its interest under Ind AS 109 as a financial asset. If it has significant influence, it uses Ind AS 28 and the equity method instead. Always test the party's rights before choosing the accounting.

Key rules to remember

Initial carrying amount (equity method): Investment at initial recognition = Cost of investment (including goodwill implied in the price); Goodwill on acquisition stays inside the investment. It is not amortised and not tested separately. The whole carrying amount is tested for impairment under Ind AS 36 when indicators exist.
Carrying amount at year end: Closing = Opening + Share of profit (or − loss) + Share of OCI − Dividends received − Impairment loss; Share is based on present ownership interests only. Potential voting rights and other derivatives are not taken into account, except where they give present access to the returns associated with an ownership interest. Use the investee's profit after uniform accounting policy adjustments.
Unrealised profit, downstream sale (investor to JV): Elimination = Profit on goods still held × Investor's share %; Deduct the eliminated amount from your share of the investee's profit, with the matching reduction in the carrying amount of the investment. Only the investor's share is eliminated. The same logic applies to upstream sales (JV to investor).
Separate financial statements: investment in JV: Carry at cost, or in accordance with Ind AS 109, or using the equity method per Ind AS 28; One choice for each category of investment. Cost model: dividend income goes to profit or loss. Under the equity method, dividends reduce the carrying amount.
Party without joint control: Ind AS 109 if no significant influence; Ind AS 28 if significant influence; Joint control test comes first, then significant influence. Control, if present, leads to consolidation under Ind AS 110.
Losses beyond the investment: Recognise losses until carrying amount (plus long-term interests, in substance part of the net investment) is nil; After that, recognise further losses only to the extent of legal or constructive obligations or payments made for the investee.

How to solve Accounting for Joint Ventures and Separate Financial Statements questions

Use this order for any question on joint ventures and separate financial statements. It stops you from jumping to the equity method too early.

1Check who has control. If one party controls, it is a subsidiary under Ind AS 110, not a joint arrangement.
2Check joint control. Look for unanimous consent on relevant activities. A party without it is not a joint venturer.
3Classify the arrangement. Net-asset rights mean a joint venture. Direct rights to assets and obligations for liabilities mean a joint operation, which follows a different method.
4Identify which statements the question wants: consolidated (equity method) or separate (cost, Ind AS 109 or equity method).
5For the equity method, build the investment account: cost, add share of profit and OCI, deduct dividends, adjust for unrealised profit and impairment.
6Adjust the investee's profit first for uniform policies, fair-value differences on acquisition and unrealised profit on intra-group sales.
7For a party without joint control, apply Ind AS 109 or Ind AS 28 depending on significant influence.
8State the conclusion with the standard reference and the amounts, in provision, facts and conclusion form.

Quickest way: Four-line decision and roll-forward

When to use it: Use when the question gives numbers and a short time. It fits most MCQs and short computational parts.

Write the decision: control → Ind AS 110; joint control + net assets → equity method; joint control + direct rights → joint operation; no joint control → Ind AS 109 or Ind AS 28.
Write the roll-forward: Cost + Share of profit + Share of OCI − Dividends − Unrealised profit eliminated − Impairment.
For separate statements, name the chosen basis: cost (dividend income in profit or loss), Ind AS 109 fair value, or the equity method.
Check that dividends reduced the investment under the equity method and were not shown as income.

Common mistakes in Accounting for Joint Ventures and Separate Financial Statements

Taking dividends from a joint venture to profit or loss in the equity-method statements.
Students carry over the cost-model habit from separate statements.
Fix: Under the equity method, dividends reduce the carrying amount. Income is your share of the investee's profit.
Assuming the equity method is barred in separate financial statements.
Students mix up the consolidated rule with the separate statements rule.
Fix: Ind AS 27 allows cost, Ind AS 109 or the equity method per Ind AS 28 in separate statements. Read the question for the basis the entity has chosen, and apply it consistently to the category of investment.
Treating every party in a joint arrangement as a joint venturer.
The word participates is read as having joint control.
Fix: A party without joint control is not a joint venturer. Apply Ind AS 109, or Ind AS 28 if it has significant influence.
Eliminating 100% of unrealised profit on a sale to the joint venture.
Students copy the subsidiary consolidation rule.
Fix: For a joint venture, eliminate only the investor's share of the unrealised profit. Deduct it from your share of the investee's profit, with the matching reduction in the carrying amount of the investment.
Amortising goodwill included in the investment.
Old habits from earlier standards.
Fix: Goodwill is not amortised or tested separately. Test the whole carrying amount for impairment under Ind AS 36.
Classifying a joint arrangement by legal form alone.
A separate legal entity looks like a joint venture.
Fix: Check legal form, contractual terms and other facts. Rights to assets and obligations for liabilities make it a joint operation.

Worked examples

Example 1

Alpha Ltd acquires 40% of Beta Ltd, a joint venture under a contract requiring unanimous consent of the venturers, for ₹4,00,000 on 1 April. Beta earns a profit of ₹3,00,000 for the year and declares a dividend of ₹1,00,000. Beta's OCI for the year is ₹50,000. Show the carrying amount in Alpha's consolidated financial statements at year end and the dividend treatment in its separate financial statements (cost model).

Show the solution

Joint control exists through unanimous consent. Rights are to net assets, so Beta is a joint venture and Alpha uses the equity method.
Share of profit = 40% × ₹3,00,000 = ₹1,20,000.
Share of OCI = 40% × ₹50,000 = ₹20,000, recognised in Alpha's OCI.
Dividend received = 40% × ₹1,00,000 = ₹40,000, which reduces the investment.
Closing carrying amount = ₹4,00,000 + ₹1,20,000 + ₹20,000 − ₹40,000 = ₹5,00,000.
In separate statements under cost, the investment stays at ₹4,00,000 and the dividend of ₹40,000 is income in profit or loss.

Answer: Consolidated carrying amount is ₹5,00,000. In separate statements the investment stays at ₹4,00,000 and dividend income is ₹40,000.

Example 2

Gamma Ltd holds 30% of Delta Ltd, a joint venture. The carrying amount of the investment at the start of the year, before the year's profit share and the unrealised profit adjustment, is ₹6,00,000. During the year Gamma sold goods costing ₹80,000 to Delta for ₹1,00,000. Delta still holds all the goods at year end. Delta's profit for the year is ₹2,00,000, with no other adjustments. Separately, Epsilon Ltd holds 10% of Delta, has no joint control and no significant influence. Compute Gamma's closing carrying amount and state how Epsilon accounts for its interest.

Show the solution

The opening carrying amount is ₹6,00,000.
The sale is downstream, from the investor to the joint venture. Unrealised profit = ₹1,00,000 − ₹80,000 = ₹20,000.
Gamma's share of the unrealised profit = 30% × ₹20,000 = ₹6,000.
Share of Delta's profit = 30% × ₹2,00,000 = ₹60,000.
Share of profit after elimination = ₹60,000 − ₹6,000 = ₹54,000.
Closing carrying amount = opening ₹6,00,000 + ₹54,000 = ₹6,54,000, assuming no dividends, OCI or impairment.
Epsilon has no joint control and no significant influence, so it is not a joint venturer. It accounts for its 10% interest as a financial asset under Ind AS 109.

Answer: Gamma's closing carrying amount is ₹6,54,000. Epsilon accounts for its interest under Ind AS 109.

Exam tips

In case scenarios, read for words like unanimous consent, net assets and separate vehicle before choosing the accounting.
Always say which statements you are answering for: consolidated or separate. Marks are often lost by mixing them.
Show the roll-forward of the investment line by line, so partial marks are secured even if one figure is wrong.
For a party without joint control, name both routes: Ind AS 109, or Ind AS 28 if significant influence exists.
Eliminate only the investor's share of unrealised profit, and state that in your working.

Practice questions from Ind AS 111 Joint Arrangements

Accounting for Joint Ventures and Separate Financial Statements in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Accounting for Joint Ventures and Separate Financial Statements: frequently asked questions

How is a joint venture accounted for under Ind AS 111?

A joint venturer recognises its interest as an investment and uses the equity method under Ind AS 28 in consolidated statements. Ind AS 28 exempts some cases: investments held by a venture capital organisation, mutual fund or similar entity and measured at fair value through profit or loss, investments classified as held for sale (Ind AS 105 applies), and a parent exempt from consolidation or meeting the intermediate parent conditions. In separate statements it uses cost, Ind AS 109 or the equity method.

Can I use the equity method in separate financial statements?

Yes. Under Ind AS 27, an entity may account for investments in joint ventures in separate financial statements at cost, in accordance with Ind AS 109, or using the equity method as described in Ind AS 28. Apply the same accounting to each category of investment.

How does a party without joint control account for its interest?

If it has no significant influence, it accounts for its interest under Ind AS 109. If it has significant influence, it uses the equity method under Ind AS 28. If it controls, it consolidates under Ind AS 110.

What happens to dividends from a joint venture?

In equity-method statements they reduce the carrying amount of the investment. In separate statements under the cost model they are income in profit or loss when the right to receive them is established.