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

Gamma Ltd is a joint operator with a 25% interest. It sells an asset with carrying amount ₹12,00,000 to the joint operation for ₹9,00,000. The price shows that the asset's net realisable value has fallen to ₹9,00,000. What loss does Gamma Ltd recognise?

Gamma Ltd recognises the full loss of ₹3,00,000. Because the sale price evidences a fall in net realisable value, the joint operator must recognise the loss fully rather than only to the extent of the other parties' interests.

  1. A₹2,25,000
  2. B₹3,00,000Correct
  3. C₹2,25,000 after deferring 25% of the loss
  4. D₹75,000

Explanation

Per para B35, when a transaction evidences a reduction in net realisable value or an impairment of the asset sold to the joint operation, the joint operator recognises the loss fully. The loss is 12,00,000 - 9,00,000 = ₹3,00,000. The ₹2,25,000 option wrongly limits it to the other parties' 75%, and ₹75,000 uses only Gamma's own share.

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