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

Ganga Ltd holds a 40% interest in a jointly controlled entity, Jal Ltd, and prepares consolidated financial statements. At year end Jal Ltd has fixed assets of Rs 50,00,000, current assets of Rs 20,00,000, current liabilities of Rs 10,00,000 and long-term loans of Rs 12,00,000. Under proportionate consolidation, what is Ganga's share of net assets (assets less all liabilities) included line by line?

The share of net assets is 40% of Rs 48,00,000, which is Rs 19,20,000.

  1. ARs 20,80,000Correct
  2. BRs 24,00,000
  3. CRs 28,00,000
  4. DRs 12,80,000

Explanation

Ganga's share of assets = 40% x 70,00,000 = 28,00,000. Share of liabilities = 40% x 22,00,000 = 8,80,000. Net = 28,00,000 - 8,80,000 = 19,20,000. Check: net assets of Jal = 70,00,000 - 22,00,000 = 48,00,000; 40% = 19,20,000. So the correct figure is Rs 19,20,000, which is not among the options as listed.

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