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

Alpha Ltd and Beta Ltd, two Indian companies, jointly control a venture structured as a separate entity, Gamma Ventures Ltd, in which each contributes 50% of the capital. Under AS 27, which type of joint venture is this?

This is a jointly controlled entity. AS 27 classifies a joint venture that is carried on through a separate corporation, partnership or other entity, in which each venturer holds an interest and shares joint control, as a jointly controlled entity, unlike operations or assets arrangements.

  1. AJointly controlled operations
  2. BJointly controlled assets
  3. CJointly controlled entityCorrect
  4. DAssociate

Explanation

AS 27 identifies three forms of joint venture: jointly controlled operations, jointly controlled assets and jointly controlled entities. Where the venture involves establishing a corporation, partnership or other entity in which each venturer has an interest, with joint control, it is a jointly controlled entity. An associate involves significant influence, not joint control.

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