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CA Final · Financial Reporting · Ind AS 111 Joint Arrangements

Mehra Ltd holds a 50% interest in an arrangement with Sethi Ltd. The parties have no joint control because Mehra Ltd alone directs the relevant activities, and the arrangement is therefore outside the scope of Ind AS 111. How should Mehra Ltd account for its interest?

Mehra Ltd accounts for its interest under the relevant Ind AS such as Ind AS 110, Ind AS 28 or Ind AS 109, depending on the interest's nature, because the arrangement is outside Ind AS 111. It is not forced into one standard, such as Ind AS 28 in every case.

  1. AUnder Ind AS 111 as a joint operation, recognising 50% of assets and liabilities
  2. BIn accordance with relevant Ind ASs such as Ind AS 110, Ind AS 28 or Ind AS 109, depending on the nature of the interestCorrect
  3. CAlways under Ind AS 28 using the equity method
  4. DIt need not account for the interest until the arrangement is wound up

Explanation

When an arrangement is outside the scope of Ind AS 111, the entity accounts for its interest under relevant Ind ASs such as Ind AS 110, Ind AS 28 or Ind AS 109. Here Mehra Ltd directs the relevant activities alone, so control may exist and Ind AS 110 may apply. Fixing Ind AS 28 in every case is wrong because the right standard depends on the nature of the interest.

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