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CA Final · Financial Reporting · Ind AS 111 Joint Arrangements

Meridian Infra Ltd and Sarvottam Builders Pvt Ltd have signed a contractual arrangement under which both parties have joint control over a highway project. As per the definitions in Ind AS 111, how is such an arrangement classified at the broadest level?

The arrangement is a joint arrangement, because two or more parties have joint control over it. Ind AS 111 states that every joint arrangement is either a joint operation or a joint venture, so it is not a subsidiary, associate or simple financial instrument.

  1. AA joint arrangement, which is either a joint operation or a joint ventureCorrect
  2. BA subsidiary of the party holding the larger share of capital
  3. CAn associate of both parties, accounted under Ind AS 28 only
  4. DA financial instrument accounted under Ind AS 109 only

Explanation

Ind AS 111 defines a joint arrangement as an arrangement of which two or more parties have joint control. It states that a joint arrangement is either a joint operation or a joint venture. Treating it as a subsidiary or an associate ignores that joint control exists.

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