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Sale BY a joint operator TO its joint operation: when the transaction provides evidence of REDUCTION IN NRV or IMPAIRMENT of the asset transferred, the joint operator recognises:
AFULLY the loss/NRV reduction in its own books — i.e. no elimination of the unrealised portion for itself
BThe loss in OCI
COnly its proportionate share (e.g. 60%) of the loss
DNo loss until the JO sells the asset onwards
Answer & Solution
Correct answer: A. FULLY the loss/NRV reduction in its own books — i.e. no elimination of the unrealised portion for itself
When a downstream sale gives evidence of NRV reduction or impairment, the loss is real for the joint operator and is recognised FULLY, not just to the extent of the other parties' share. This is an exception to the deferral rule that otherwise eliminates only the joint operator's own share.
Related questions
Identify the statement that is INCORRECT about acquiring an interest in a joint operation Identify the BEST description of how a joint operator accounts for its interest in a jointWhen an entity contributes ONLY ASSETS or GROUPS OF ASSETS THAT DO NOT CONSTITUTE BUSINESSAS 27 provided an exemption from proportionate consolidation when the joint venture was 'aWhen a party that previously merely PARTICIPATED in a joint operation (no joint control) sWhere the transaction acquiring an additional interest in a joint operation (which is a buA Ltd. has 60% interest in a joint operation. A Ltd. PURCHASES an asset from the JO; the JUnder Ind AS 111, an entity classified an interest as a jointly controlled ENTITY under AS