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

Ganga Ltd and Yamuna Ltd enter into a contractual arrangement to build a pipeline, with each venturer using its own assets and bearing its own expenses and liabilities, and no separate entity is set up. Under AS 27, this joint venture is classified as:

The arrangement is jointly controlled operations. Each venturer uses its own assets and bears its own expenses and liabilities, and no separate entity is created. Each venturer recognises its own assets, costs and its share of revenue from the sale of the output in its own books.

  1. AJointly controlled operationsCorrect
  2. BJointly controlled assets
  3. CJointly controlled entity
  4. DAssociate

Explanation

Under AS 27, when each venturer uses its own assets and incurs its own expenses and liabilities for the venture, without forming a corporation, partnership or other entity, it is a jointly controlled operation. Jointly controlled assets involve assets jointly owned, and a jointly controlled entity needs a separate entity.

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