Skip to content

CA Final · Financial Reporting · Ind AS 111 Joint Arrangements

Epsilon Ltd and Zeta Ltd, both controlled by Promoter Group P, hold joint control of a joint operation. Epsilon acquires an additional interest in a joint operation that is a business. Promoter Group P controls all parties sharing joint control both before and after the acquisition, and the control is not transitory. Which treatment is consistent with Ind AS 111 as notified in India?

Epsilon should apply the accounting in Appendix C Business Combinations under Common Control of Ind AS 103, as paragraph B33D of Ind AS 111 refers. This applies because all joint controlling parties are under the same ultimate controller before and after, and that control is not transitory.

  1. AApply the accounting in Appendix C Business Combinations under Common Control of Ind AS 103, as referred to in paragraph B33DCorrect
  2. BApply IFRS 3 principles by measuring identifiable assets at fair value and recognising goodwill
  3. CTreat the acquisition as outside any standard and expense the cost
  4. DApply Ind AS 109 and measure the interest at fair value through profit or loss

Explanation

Ind AS 111 paragraph B33D refers to Appendix C of Ind AS 103 where parties sharing joint control, including the acquirer, are under common control of the same ultimate controlling party both before and after, and the control is not transitory. All conditions are met here. Option B reflects the general business combination approach, which Indian GAAP replaces in this case. Options C and D have no basis in 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