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

Under AS 27, which statement about a venturer's separate financial statements for its interest in a jointly controlled entity is correct?

In its separate financial statements, the venturer accounts for an interest in a jointly controlled entity as an investment under AS 13. Proportionate consolidation is reserved for consolidated financial statements, so applying it or the equity method in separate statements would be incorrect.

  1. AThe interest is accounted for as an investment in accordance with AS 13Correct
  2. BProportionate consolidation is applied
  3. CThe equity method is applied
  4. DThe interest is not disclosed

Explanation

AS 27 requires that in the separate financial statements of the venturer, the interest in a jointly controlled entity is accounted for as an investment under AS 13. Proportionate consolidation applies only in consolidated financial statements. The equity method is not prescribed under AS 27 for this purpose.

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