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

Alpha Ltd and Beta Ltd jointly control a venture by a contractual arrangement under which each shares the output of a common plant in agreed proportions, but each owns separately the assets it uses and bears its own liabilities. Under AS 27, this arrangement is best classified as:

The arrangement is jointly controlled operations. Each venturer uses its own separately owned assets and bears its own liabilities, and no separate entity is created. Jointly controlled assets require joint ownership of assets, and a jointly controlled entity requires a separate legal entity.

  1. AJointly controlled operationsCorrect
  2. BJointly controlled assets
  3. CJointly controlled entity
  4. DInvestment in an associate

Explanation

In jointly controlled operations each venturer uses its own assets and incurs its own expenses and liabilities, with no separate entity formed. Here each owns its assets separately, so it is not jointly controlled assets, where assets are jointly owned. No entity is established, so it is not a jointly controlled entity.

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