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CA Final · Financial Reporting · Ind AS 111 Joint Arrangements

Gamma Ltd holds an interest in an arrangement that is found to be outside the scope of Ind AS 111 because no two parties have joint control. Gamma has only significant influence over the investee. Under the guidance on assessing joint control, how should Gamma account for its interest?

When an arrangement falls outside Ind AS 111, the entity accounts for its interest under the relevant Ind ASs, such as Ind AS 110, Ind AS 28 or Ind AS 109. Since Gamma has only significant influence, it would typically apply Ind AS 28, not Ind AS 111.

  1. AUnder Ind AS 111 as a joint operation, recognising its share of assets and liabilities
  2. BUnder relevant Ind ASs such as Ind AS 110, Ind AS 28 or Ind AS 109, depending on the nature of the interestCorrect
  3. CUnder Ind AS 103 as a business combination at fair value
  4. DUsing only the cost method, because the arrangement is outside all consolidation standards

Explanation

Paragraph B11 states that when an arrangement is outside the scope of Ind AS 111, the entity accounts for its interest under relevant Ind ASs, such as Ind AS 110, Ind AS 28 or Ind AS 109. With significant influence, Ind AS 28 would typically apply. Option A is wrong because Ind AS 111 does not apply at all. Option D is wrong because no rule limits the accounting to the cost method.

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