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Neelanchal Gas and Seemanchal Refineries jointly own an underground storage facility (Neelanchal 60%, Seemanchal 40%). Decisions require UNANIMOUS consent. No separate vehicle is formed. Under Ind AS 111, this is a:
AJoint venture — both parties account for their interest using the equity method
BJOINT OPERATION — each party recognises its share of assets, liabilities, revenues and expenses (Neelanchal recognises 60% of the storage facility as PPE)
CSubsidiary of Neelanchal — Neelanchal has the larger ownership
DInvestment in an associate — significant influence between the parties
Answer & Solution
Correct answer: B. JOINT OPERATION — each party recognises its share of assets, liabilities, revenues and expenses (Neelanchal recognises 60% of the storage facility as PPE)
Ind AS 111 — joint control (unanimous consent for relevant activities) + no separate vehicle = JOINT OPERATION. Each joint operator recognises its share of assets, liabilities, revenues, expenses (DIRECTLY in its FS — not via equity method). Joint venture would require a separate vehicle and would use equity method under Ind AS 28.
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