PPT: Accounting Standards (27) | Advanced Accounting for CA Intermediate PDF Download

 Page 1


 
 
ACCOUNTING STANDARD - 27
 FINANCIAL REPORTING OF 
INTERESTS IN JOINT VENTURES
Page 2


 
 
ACCOUNTING STANDARD - 27
 FINANCIAL REPORTING OF 
INTERESTS IN JOINT VENTURES
 
 
 
 
SCOPE
SCOPE
?
Applicable in accounting for interests in joint ventures and the 
reporting of joint venture assets, liabilities, income and 
expenses in the financial statements of venturers and investors, 
regardless of the structures or forms under which the joint 
venture activities take place. 
?
Applicable only  where consolidated financial statements are 
prepared and presented by the venturer. 
Page 3


 
 
ACCOUNTING STANDARD - 27
 FINANCIAL REPORTING OF 
INTERESTS IN JOINT VENTURES
 
 
 
 
SCOPE
SCOPE
?
Applicable in accounting for interests in joint ventures and the 
reporting of joint venture assets, liabilities, income and 
expenses in the financial statements of venturers and investors, 
regardless of the structures or forms under which the joint 
venture activities take place. 
?
Applicable only  where consolidated financial statements are 
prepared and presented by the venturer. 
 
 
 
 
DEFINITIONS
DEFINITIONS
?
A joint venture is a contractual arrangement whereby two or more 
parties undertake an economic activity, which is subject to joint control.
?
Joint control is the contractually agreed sharing of control over an 
economic activity.
?
Control is the power to govern the financial and operating policies of 
an economic activity so as to obtain benefits from it.
?
A venturer is a party to a joint venture and has joint control over that 
joint venture.
?
An investor in a joint venture is a party to a joint venture and does not 
have joint control over that joint venture.
?
Proportionate consolidation is a method of accounting and reporting 
whereby a venturer's share of each of the assets, liabilities, income and 
expenses of a jointly controlled entity is reported as separate line items 
in the venturer's financial statements.  
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ACCOUNTING STANDARD - 27
 FINANCIAL REPORTING OF 
INTERESTS IN JOINT VENTURES
 
 
 
 
SCOPE
SCOPE
?
Applicable in accounting for interests in joint ventures and the 
reporting of joint venture assets, liabilities, income and 
expenses in the financial statements of venturers and investors, 
regardless of the structures or forms under which the joint 
venture activities take place. 
?
Applicable only  where consolidated financial statements are 
prepared and presented by the venturer. 
 
 
 
 
DEFINITIONS
DEFINITIONS
?
A joint venture is a contractual arrangement whereby two or more 
parties undertake an economic activity, which is subject to joint control.
?
Joint control is the contractually agreed sharing of control over an 
economic activity.
?
Control is the power to govern the financial and operating policies of 
an economic activity so as to obtain benefits from it.
?
A venturer is a party to a joint venture and has joint control over that 
joint venture.
?
An investor in a joint venture is a party to a joint venture and does not 
have joint control over that joint venture.
?
Proportionate consolidation is a method of accounting and reporting 
whereby a venturer's share of each of the assets, liabilities, income and 
expenses of a jointly controlled entity is reported as separate line items 
in the venturer's financial statements.  
 
 
FORMS OF JOINT 
FORMS OF JOINT 
VENTURES
VENTURES
   
-
jointly controlled operations, 
-
jointly controlled assets, and 
-
jointly controlled entities. 
   
Page 5


 
 
ACCOUNTING STANDARD - 27
 FINANCIAL REPORTING OF 
INTERESTS IN JOINT VENTURES
 
 
 
 
SCOPE
SCOPE
?
Applicable in accounting for interests in joint ventures and the 
reporting of joint venture assets, liabilities, income and 
expenses in the financial statements of venturers and investors, 
regardless of the structures or forms under which the joint 
venture activities take place. 
?
Applicable only  where consolidated financial statements are 
prepared and presented by the venturer. 
 
 
 
 
DEFINITIONS
DEFINITIONS
?
A joint venture is a contractual arrangement whereby two or more 
parties undertake an economic activity, which is subject to joint control.
?
Joint control is the contractually agreed sharing of control over an 
economic activity.
?
Control is the power to govern the financial and operating policies of 
an economic activity so as to obtain benefits from it.
?
A venturer is a party to a joint venture and has joint control over that 
joint venture.
?
An investor in a joint venture is a party to a joint venture and does not 
have joint control over that joint venture.
?
Proportionate consolidation is a method of accounting and reporting 
whereby a venturer's share of each of the assets, liabilities, income and 
expenses of a jointly controlled entity is reported as separate line items 
in the venturer's financial statements.  
 
 
FORMS OF JOINT 
FORMS OF JOINT 
VENTURES
VENTURES
   
-
jointly controlled operations, 
-
jointly controlled assets, and 
-
jointly controlled entities. 
   
 
 
 
 
CONTRACTUAL ARRANGEMENT
CONTRACTUAL ARRANGEMENT
The contractual arrangement may be evidenced in a number of ways, 
for example by a contract between the venturers or minutes of 
discussions between the venturers. In some cases, the arrangement is 
incorporated in the articles or other by-laws of the joint venture. 
Whatever its form, the contractual arrangement is normally in 
writing and deals with such matters as: 
?
The activity, duration and reporting obligations of the joint venture; 
?
The appointment of the board of directors or equivalent governing 
body of the joint venture and the voting rights of the venturers;
?
Capital contributions by the venturers; and
?
the sharing by the venturers of the output, income, expenses or 
results of the joint venture.