Skip to content

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

Eshan Ltd holds 40% in a jointly controlled entity, JV Ltd, and prepares consolidated financial statements using proportionate consolidation. JV Ltd's balance sheet at year end shows fixed assets Rs 80,00,000, current assets Rs 30,00,000, long-term borrowings Rs 50,00,000 and current liabilities Rs 20,00,000. Eshan Ltd's investment in JV Ltd is carried at Rs 16,00,000. What amount of total assets from JV Ltd will be added line by line in Eshan's consolidated balance sheet (before eliminating the investment)?

Eshan Ltd will add Rs 44,00,000 of assets. Under proportionate consolidation it includes 40% of each asset line of the jointly controlled entity, and 40% of total assets of Rs 1,10,00,000 is Rs 44,00,000. The investment is then eliminated against its share of equity.

  1. ARs 44,00,000Correct
  2. BRs 110,00,000
  3. CRs 16,00,000
  4. DRs 28,00,000

Explanation

Total assets of JV Ltd are 80,00,000 + 30,00,000 = Rs 1,10,00,000. Eshan's 40% share is Rs 44,00,000. Rs 1,10,00,000 would be full consolidation, Rs 28,00,000 is share of net assets (40% of 70,00,000), and Rs 16,00,000 is the investment cost.

Did you get it right without looking?

One question tells you little. A timed set on AS 27 Financial Reporting of Interests in Joint Ventures shows your real accuracy, how long you take and where you lose marks.

Practise AS 27 Financial Reporting of Interests in Joint VenturesFree diagnostic mock

More AS 27 Financial Reporting of Interests in Joint Ventures questions