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Identify the BEST description of how a joint operator accounts for its interest in a joint operation in its CONSOLIDATED financial statements.
ARecognise the investment at cost less impairment
BRecognise its share of assets, liabilities, revenues and expenses of the joint operation, line by line, in accordance with the applicable Ind ASs
CEquity method using a single line-item investment
DEliminate the joint operation entirely as if it were a fellow subsidiary
Answer & Solution
Correct answer: B. Recognise its share of assets, liabilities, revenues and expenses of the joint operation, line by line, in accordance with the applicable Ind ASs
Joint operators recognise their share of assets, liabilities, revenues and expenses line-by-line (Ind AS 111 paragraph 20). This is different from joint ventures (equity method, single line) and from subsidiaries (full consolidation).
Related questions
Identify the statement that is INCORRECT about acquiring an interest in a joint operation When 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) sSale BY a joint operator TO its joint operation: when the transaction provides evidence ofWhere 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