Page 4 - 30. COMPILER QB - IND AS 101

of assets and liabilities of ABC Pvt. Ltd. included in the consolidated financial statement of XYZ Pvt. Ltd. is
as under:
Particulars Rs in Lakhs

Property, Plant & Equipment 1,200
Long Term Loans & Advances 405
Trade Receivables 280
Other Current Assets 50
Trade Payables 75
Short Term Provisions 35
The Investment is in the nature of Joint Venture as per Ind AS 111.
The Company has approached you to advise and suggest the accounting adjustments which are required to be
made in the opening Balance Sheet as on 1st April, 2017.
SOLUTION

As per Ind AS 101, when changing from proportionate consolidation to the equity method, an entity shall
recognise its investment in the joint venture at transition date to Ind AS.
That initial investment shall be measured as the aggregate of the carrying amounts of the assets and

liabilities that the entity had previously proportionately consolidated, including any goodwill arising from
acquisition. If the goodwill previously belonged to a larger cash-generating unit, or to a group of cash-
generating units, the entity shall allocate goodwill to the joint venture on the basis of the relative carrying
amounts of the joint venture and the cash-generating unit or group of cash-generating units to which it
belonged. The balance of the investment in the joint venture at the date of transition to Ind AS, is regarded
as the deemed cost of the investment at initial recognition.

Accordingly, the deemed cost of the investment will be
Property, Plant & Equipment 1,200
Goodwill (Refer Note below) 119
Long Term Loans & Advances 405
Trade Receivables 280
Other Current Assets 50
Total Assets 2054
Less: Trade Payables 75
Short Term Provisions 35
Deemed cost of the investment in JV 1944
Calculation of proportionate goodwill share of Joint Venture i.e. ABC Pvt. Ltd.
Property, Plant & Equipment 22,288
Goodwill 1,507
Long Term Loans & Advances 6,350
Trade Receivables 1,818
Other Current Assets 104
Total Assets 32,067
Less: Trade Payables 8,455
Short Term Provisions 475
23,137

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