Page 2 - 18. COMPILER QB - INDAS 28 _ 111

INDAS 28 & INDAS 111

INVESTMENT IN A
SSOCIATES & JV

& JOINT ARRANGEMENTS

(TOTAL NO. OF QUESTIONS – 10)

Index

S.No. Particulars Page No.

1 RTP Questions 18.1
2 MTP Questions 18.7

3 Past Exam Paper Questions 18.11
4 Newly Added Question 18.13

RTPs QUESTIONS

Q1. (IND AS 111 – NOV. 18)

On 1st April 2017 Alpha Ltd. commenced joint construction of a property with Gama Ltd. For this purpose, an
agreement has been entered into that provides for joint operation and ownership of the property. All the

ongoing expenditure, comprising maintenance plus borrowing costs, is to be shared equally. The construction
was completed on 30th September 2017 and utilisation of the property started on 1st January 2018 at which

time the estimated useful life of the same was estimated to be 20 years.
Total cost of the construction of the property was Rs40 crores. Besides internal accruals, the cost was partly

funded by way of loan of Rs10 crores taken on 1st January 2017. The loan carries interest at an annual rate of
10% with interest payable at the end of year on 31st December each year. The company has spent Rs4,00,000

on the maintenance of such property.
The company has recorded the entire amount paid as investment in Joint Venture in the books of accounts.

Suggest the suitable accounting treatment of the above transaction as per applicable Ind AS.

SOLUTION

As provided in Ind- AS 111 - Joint Arrangements - this is a joint arrangement because two or more parties
have joint control of the property under a contractual arrangement. The arrangement will be regarded as a

joint operation because Alpha Ltd. and Gama Ltd. have rights to the assets and obligations for the liabilities
of this joint arrangement. This means that the company and the other investor will each recognise 50% of

the cost of constructing the asset in property, plant and equipment.

18.1