Advanced Accounting · AS 27 Financial Reporting of Interests in Joint Ventures

Transactions Between Venturer and JV, Investor Reporting and Disclosures under AS 27

Updated 4 October 2026 · Fact-checked

AS 27 says a venturer recognises only the part of a gain on a sale to its joint venture that belongs to the other venturers, while a loss showing impairment or lower net realisable value is recognised in full. Investors without joint control use AS 13, AS 21 or AS 23. AS 27 also lists the required disclosures.

Understand Transactions Between Venturer and JV, Investor Reporting and Disclosures

A venturer often sells or contributes assets to its own joint venture (JV), or buys from it. Part of any profit on such a deal is really the venturer's own profit, because it owns a share of the JV. AS 27 stops you booking that part until the asset is sold outside the JV.

Contribution or sale of assets to a JV. While the asset stays with the JV, and the venturer has transferred the significant risks and rewards of ownership, the venturer recognises only the portion of the gain that is attributable to the other venturers. The venturer's own share is held back. Loss: AS 27 says the venturer recognises the full amount of a loss when the sale or contribution provides evidence of a reduction in the net realisable value (NRV) of current assets, or an impairment loss. The loss is not apportioned by ownership share.

Memory aid (this is not AS 27 text): ask whose loss it is. On a sale to the JV, the asset was yours, so a fall in its value is already yours. That is why the full loss is booked.

Purchase of assets from a JV. The venturer does not recognise its share of the JV's profit on the deal until it resells the asset to an independent party. AS 27 treats the venturer's share of losses in the same way as profits, except that a loss is recognised immediately when it represents a reduction in the NRV of current assets or an impairment loss. So here you deal with your share of the loss, not the full amount. Contrast this with a sale to the JV, where the full loss is recognised.

Memory aid (this is not AS 27 text): on a purchase, the JV is the seller, so you think of only your share of the JV's result. On a sale, you are the seller, so you think of your own full result.

Investor not a venturer. An investor in a JV who has no joint control is outside AS 27 venturer reporting. In its consolidated financial statements it applies AS 21 if the JV is its subsidiary (it has control), or AS 23 (equity method) if the JV is its associate (it has significant influence). Otherwise it reports the interest under AS 13 (Accounting for Investments). In its separate financial statements the interest is an investment under AS 13. Hold the point: AS 27 reporting applies to venturers with joint control.

Operator of a JV. The operator or manager accounts for any fees under AS 9 (Revenue Recognition). If the operator is also a venturer, it reports its own interest as a venturer.

Venturer's separate statements and consolidated statements. In consolidated financial statements (CFS), a venturer reports a jointly controlled entity using proportionate consolidation. In separate financial statements of the venturer, the interest in a jointly controlled entity is accounted for as an investment under AS 13. AS 21 consolidates a subsidiary line by line in full and shows minority interest. AS 27 proportionate consolidation takes only the venturer's share and shows no minority interest. AS 27 also needs to be read with AS 18 for related-party disclosures, since a JV is a related party.

Disclosures. A venturer discloses:

The aggregate amount of its share of contingent liabilities in respect of its interests in JVs, shown separately from its own contingent liabilities.
The aggregate amount of its share of capital commitments in respect of its interests in JVs, shown separately from its own.
A list and description of the JVs, with the proportion of ownership interest held in jointly controlled entities.

For jointly controlled entities, the venturer also discloses the aggregate amount of its interest in each of: current assets, long-term assets, current liabilities, long-term liabilities, income and expenses.

Key rules to remember

Gain on sale of asset to JV (asset still held by JV): Gain recognised = Total gain × (Share of other venturers ÷ 100); Equivalent: total gain − venturer's own share of gain. The venturer's share is held back until the asset is sold outside the JV.
Loss on sale or contribution to JV: Loss recognised = 100% of loss, if it evidences a fall in NRV of current assets or an impairment loss; AS 27 requires the full amount of such a loss to be recognised, so do not apportion it. Memory aid, not AS 27 text: the asset was yours, so the fall in value is yours.
Purchase from JV: Profit share not recognised until resale to an independent party; loss: venturer's share, recognised immediately if it represents a fall in NRV of current assets or an impairment loss; Venturer's share of unrealised profit is eliminated. Losses are dealt with like profits (venturer's share), except that a loss showing NRV fall or impairment is recognised immediately. On a sale to the JV the full loss is recognised.
Reporting rules: Venturer: CFS proportionate consolidation; separate statements AS 13 investment. Investor without joint control: CFS AS 21 if the JV is its subsidiary, AS 23 (equity method) if the JV is its associate, otherwise AS 13; separate statements AS 13; Operator fees: AS 9.

How to solve Transactions Between Venturer and JV, Investor Reporting and Disclosures questions

Use this order for any question on venturer-JV transactions or reporting.

1Identify who you are: venturer with joint control, investor without joint control, or operator.
2Identify the direction of the deal: sale or contribution to the JV, or purchase from the JV.
3Check whether the transaction gives a gain or a loss, and whether the loss evidences impairment or lower NRV of current assets.
4For a gain on sale to the JV, find the venturer's percentage share and recognise only the share of the other venturers.
5For a loss on a sale or contribution to the JV that shows impairment or lower NRV, recognise the full loss, as AS 27 requires.
6For a purchase from the JV, eliminate the venturer's share of the JV's unrealised profit if the goods are still held. Deal with the venturer's share of any loss, and recognise it immediately if it represents lower NRV or impairment.
7Check the statement type: consolidated (proportionate consolidation for a venturer) or separate (AS 13 investment). For an investor without joint control, use AS 21, AS 23 or AS 13 in the CFS as the level of control or influence requires.
8Note the disclosures required: share of contingent liabilities and capital commitments, the list of JVs with ownership proportion, and for jointly controlled entities the interest in current and long-term assets and liabilities, income and expenses.
9Show a clear working and a one-line conclusion citing AS 27.

Quickest way: Share-split shortcut for gains and losses

When to use it: Use it for MCQs and short numericals on sale to or purchase from a JV.

Ask: gain or loss? On a sale or contribution to the JV, a loss showing impairment or lower NRV is booked in full. Memory aid: it is your own asset.
For a gain on a sale to the JV, multiply the total gain by (100% − your share).
For a purchase from the JV, remove your share of the profit on goods still unsold. A loss is dealt with at your share, and booked immediately if it shows lower NRV or impairment.
For written answers, write the rule from AS 27 first, then the working, then the amount recognised and the amount deferred. This earns step marks.

Common mistakes in Transactions Between Venturer and JV, Investor Reporting and Disclosures

Recognising the full gain on a sale of an asset to the JV.
Students treat the JV as an outside party.
Fix: Recognise only the portion attributable to the other venturers. Defer your own share.
Apportioning a loss that shows impairment or lower NRV on a sale or contribution to the JV.
Students apply the gain rule to losses too.
Fix: AS 27 requires the full amount of such a loss to be recognised. Only on a purchase from the JV do you deal with the venturer's share of the loss.
Recognising the full loss on a purchase from the JV.
Students carry over the full-loss rule from a sale to the JV.
Fix: On a purchase, AS 27 deals with the venturer's share of the loss, as it does for profits. Recognise it immediately if it represents lower NRV or impairment.
Showing minority interest under proportionate consolidation.
Students mix up AS 21 and AS 27.
Fix: AS 27 takes only the venturer's share of each item, so there is no minority interest.
Applying proportionate consolidation in separate financial statements.
Students forget the statement type.
Fix: In separate statements the interest in a jointly controlled entity is an AS 13 investment.
Applying AS 27 venturer reporting to an investor with no joint control.
Any JV interest feels like an AS 27 matter.
Fix: In consolidated statements an investor without joint control uses AS 21 if the JV is its subsidiary and AS 23 (equity method) if the JV is its associate. Otherwise it uses AS 13. In separate statements the interest is an AS 13 investment.

Worked examples

Example 1

A Ltd is a venturer with a 40% share in a jointly controlled entity. A Ltd sells goods costing ₹6,00,000 to the JV for ₹8,00,000. The JV still holds all the goods at year end. How much of the gain should A Ltd recognise in its consolidated financial statements?

Show the solution

Total gain = ₹8,00,000 − ₹6,00,000 = ₹2,00,000.
A Ltd's own share of the gain = 40% of ₹2,00,000 = ₹80,000. This is held back as the goods are still with the JV.
Share of other venturers = 60% of ₹2,00,000 = ₹1,20,000.
Under AS 27, A Ltd recognises only the portion attributable to the other venturers.

Answer: A Ltd recognises a gain of ₹1,20,000 and defers ₹80,000 until the goods are sold outside the JV.

Example 2

B Ltd is a venturer with a 25% share in a jointly controlled entity. B Ltd sells to the JV an asset with a carrying amount of ₹5,00,000 for ₹4,00,000. The sale price shows that the asset's recoverable amount has fallen below carrying amount. How should B Ltd treat the loss?

Show the solution

Loss = ₹5,00,000 − ₹4,00,000 = ₹1,00,000.
The loss shows an impairment, so AS 27 requires the full amount to be recognised.
No apportionment by the 25% share is made.

Answer: B Ltd recognises the entire loss of ₹1,00,000 immediately.

Exam tips

Always state your role first: venturer, investor or operator. Many marks hinge on this.
Write the gain rule and the loss rule separately. The examiner looks for both. Note that a loss showing lower NRV or impairment is recognised in full on a sale or contribution to the JV, while on a purchase from the JV you deal with the venturer's share of the loss, recognised immediately if it shows lower NRV or impairment.
For a difference between AS 27 and AS 21, give three points: share taken, minority interest, and type of control.
List the disclosures as short bullets: share of contingent liabilities and capital commitments, the list of JVs with ownership proportion, and for jointly controlled entities the interest in current assets, long-term assets, current liabilities, long-term liabilities, income and expenses.
In MCQs, check the statement type before choosing between proportionate consolidation and an AS 13 investment.

Practice questions from AS 27 Financial Reporting of Interests in Joint Ventures

Transactions Between Venturer and JV, Investor Reporting and Disclosures: frequently asked questions

How much gain does a venturer recognise on selling an asset to its JV?

Only the part attributable to the other venturers. The venturer's own share is deferred until the asset is sold to an independent party.

How is a loss on a sale to the JV treated?

If the sale or contribution provides evidence of a reduction in the NRV of current assets or an impairment loss, AS 27 requires the full loss to be recognised. It is not apportioned by ownership share. On a purchase from the JV, the venturer deals with its share of the loss, and recognises it immediately if it represents lower NRV or impairment.

How does an investor without joint control report its JV interest?

In its consolidated financial statements it applies AS 21 if the JV is its subsidiary, or AS 23 (equity method) if the JV is its associate. Otherwise it reports under AS 13. In its separate financial statements the interest is an investment under AS 13.

What is the main difference between AS 27 and AS 21 consolidation?

AS 21 consolidates a subsidiary in full and shows minority interest. AS 27 proportionate consolidation takes only the venturer's share and shows no minority interest.