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

Ananya Ltd and Bhargav Ltd enter into a contractual arrangement to build a private toll bridge. Each venturer contributes its own machinery, keeps ownership of its own machinery, and bears its own costs. They share the toll revenue equally. No separate entity is formed. Under AS 27, this arrangement is best classified as:

The arrangement is jointly controlled operations. Each venturer uses its own machinery, keeps ownership, bears its own costs, and no separate entity exists. Revenue is shared by agreement. Jointly controlled assets would require assets that are jointly owned or controlled, which is not the case here.

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

Explanation

Under AS 27, jointly controlled operations involve each venturer using its own assets and incurring its own expenses, with no separate entity formed, while sharing revenue by agreement. Here each retains ownership of its own machinery and bears its own costs. A jointly controlled asset would need jointly owned assets, and a jointly controlled entity needs a separate entity.

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