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

Meera Ltd and Nandan Ltd jointly control a pipeline under a contractual arrangement. Each owns its own share of the pipeline's assets and bears its own share of liabilities, with no separate entity formed. Under AS 27, this arrangement is best classified as:

The arrangement is a jointly controlled asset arrangement. The venturers jointly control and own the pipeline, no separate entity exists, and each venturer accounts for its share of the jointly controlled assets and the related liabilities under AS 27.

  1. AJointly controlled operations
  2. BJointly controlled assetsCorrect
  3. CJointly controlled entity
  4. DInvestment in an associate

Explanation

AS 27 identifies three forms of joint venture. Where venturers jointly control and own one or more assets contributed to or acquired for the venture and no separate entity is formed, it is a jointly controlled asset arrangement. Jointly controlled operations involve use of the venturers' own separate assets without joint ownership of assets. A jointly controlled entity needs a separate entity.

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