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CMA Final · Corporate Financial Reporting · Accounting and Reporting of Joint Operation

Beta Ltd is a joint operator holding a 30% interest in a joint operation; the other parties hold 70%. Beta sells equipment with a carrying amount of ₹8,00,000 to the joint operation for ₹10,00,000, with no indication of impairment. What gain does Beta Ltd recognise on this sale?

Beta Ltd recognises a gain of ₹1,40,000. The total gain is ₹2,00,000, and a joint operator recognises a gain on a sale to the joint operation only to the extent of the other parties' 70% interest.

  1. A₹1,40,000Correct
  2. B₹2,00,000
  3. C₹60,000
  4. DNil

Explanation

Under para B34, the joint operator recognises gain only to the extent of the other parties' interests. Total gain = 10,00,000 - 8,00,000 = ₹2,00,000. Other parties' share = 70% x 2,00,000 = ₹1,40,000. The ₹60,000 option uses Beta's own 30%, which is the wrong base.

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