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

Ravi Ltd holds a 30% interest in a jointly controlled entity, Shree Infra. At year end, Shree Infra's balance sheet shows fixed assets of ₹80,00,000, current assets of ₹30,00,000, long-term loans of ₹40,00,000 and current liabilities of ₹20,00,000. Ravi Ltd has no other dealings with Shree Infra. On proportionate consolidation, what net amount of assets less liabilities is included in Ravi Ltd's consolidated balance sheet from Shree Infra?

The net amount is ₹15,00,000. Shree Infra's total assets of ₹1,10,00,000 less liabilities of ₹60,00,000 give net assets of ₹50,00,000, and under proportionate consolidation Ravi Ltd includes its 30% share line by line, which equals ₹15,00,000.

  1. A₹15,00,000
  2. B₹18,00,000Correct
  3. C₹30,00,000
  4. D₹33,00,000

Explanation

Net assets of Shree Infra = 80+30-40-20 = ₹50,00,000 lakh-equivalent, i.e. ₹50,00,000. Ravi's 30% share = ₹15,00,000? Check: 80,00,000+30,00,000 = 1,10,00,000; liabilities 60,00,000; net = 50,00,000; 30% = 15,00,000. So the correct figure is ₹15,00,000, not ₹18,00,000.

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