Page 14 - 35. FR APRIL 22 MTP QP ANSWERS
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-Deferred taxes (50)
Profit after taxation 13,000
3. Other Information
(a) Assets
Segment Assets 50,000 30,000 80,000
Investments 10,000
Unallocated assets 10,000
Total Assets 1,00,000
(b) Liabilities and Shareholder’s
funds
Segment liabilities 30,000 10,000 40,000
Unallocated liabilities 20,000
Share capital 10,000
Reserves and surplus 30,000
Total liabilities and 1,00,000
shareholder’s funds
(c) Others
Capital Expenditure (5,000) (2,000) (7,000)
Depreciation (1,000) (300) (1,300)
Geographical Information (` in lakh)
India (`) Outside India (`) Total (`)
Revenue 2,55,000 62,000 3,17,000
Segment assets 90,000 10,000 1,00,000
Capital expenditure 7,000 7,000
Solution 3
(a) The legal form of Entity A and the terms of the contractual arrangement indicate that the arrangement
is a joint venture. However, the other relevant facts and circumstances mentioned above indicates that:
the obligation of the parties to purchase all the output produced by Entity A reflects the exclusive
dependence of Entity A upon the parties for the generation of cash flows and, thus, the parties have an
obligation to fund the settlement of the liabilities of Entity A.
the fact that the parties have rights to all the output produced by Entity A means that the parties are
consuming, and therefore have rights to, all the economic benefits of the assets of Entity A.
These facts and circumstances indicate that the arrangement is a joint operation.
The conclusion about the classification of the joint arrangement in these circumstances would not
change if, instead of the parties using their share of the output themselves in a subsequent
manufacturing process, the parties sold their share of the output to th ird parties.
If the parties changed the terms of the contractual arrangement so that the arrangement was able
to sell output to third parties, this would result in Entity A assuming demand, inventory and credit
risks. In that scenario, such a change in the facts and circumstances would require reassessment
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