Skip to content

CA Final · Financial Reporting · Ind AS 111 Joint Arrangements

Eka Ltd is a party to an arrangement with Fino Ltd. The contract gives both parties unanimous control over relevant activities. A finance manager at Eka Ltd claims that the arrangement could be classified as a third type, 'joint asset arrangement', separate from joint operation and joint venture, for the purposes of Ind AS 111. What is the correct position?

A joint arrangement under Ind AS 111 is either a joint operation or a joint venture, and nothing else. Joint ownership of assets, absence of a separate vehicle or unequal interests do not create a third category, so the manager's claim is incorrect.

  1. AA joint arrangement is either a joint operation or a joint venture, so no third category existsCorrect
  2. BA third category is allowed when assets are jointly owned
  3. CA third category applies if the arrangement is not through a separate vehicle
  4. DA third category applies when parties hold unequal interests

Explanation

Ind AS 111 states that a joint arrangement is either a joint operation or a joint venture. There is no other classification, irrespective of ownership of assets, vehicle structure, or share unevenness. The other options invent categories not provided by the standard.

Did you get it right without looking?

One question tells you little. A timed set on Ind AS 111 Joint Arrangements shows your real accuracy, how long you take and where you lose marks.

Practise Ind AS 111 Joint ArrangementsFree diagnostic mock

More Ind AS 111 Joint Arrangements questions