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

Kiran Ltd holds a 40% interest in a jointly controlled entity, Lotus Ventures, and prepares consolidated financial statements. Lotus Ventures has fixed assets of ₹50,00,000, current assets of ₹20,00,000, long-term borrowings of ₹30,00,000 and current liabilities of ₹10,00,000. Under proportionate consolidation, the amount of net assets of Lotus Ventures that Kiran Ltd includes line by line is:

Kiran Ltd includes ₹12,00,000. Lotus Ventures has total assets of ₹70,00,000 and total liabilities of ₹40,00,000, giving net assets of ₹30,00,000. Under proportionate consolidation Kiran includes its 40% share line by line, which equals ₹12,00,000.

  1. A₹12,00,000
  2. B₹20,00,000
  3. C₹28,00,000Correct
  4. D₹32,00,000

Explanation

Net assets = (50+20) − (30+10) = ₹30,00,000 in Lotus. Wait: 70,00,000 − 40,00,000 = ₹30,00,000. 40% of 30,00,000 = ₹12,00,000. Thus the key is ₹12,00,000, the first option.

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