AS 27

1. This AS is not Mandatory.
2. Joint Venture means Contractual Arrangement between two or more parties to govern any Economic Activity .
Such Entity / Economic activity is Subject to Joint Control.
3. Joint Control means power to govern financial and / or
Operating matters of entity on Sharing basis.

1. Voting Power 50 % or more
OR AS 21
2. Power to Compose General Body AS 18
OR
3. Substantial Interest and
Power to Direct Financial /
Operating Matters
4. Power to govern Fin. / Op. Matters AS 27
5. Power to Participate AS 23
(significant Influence)

5. Joint Venture is of Three Type :
Jointly Controlled Asset ( JCA)
No Company is made
Jointly Controlled Operation ( JCO)
No Company is made
Jointly Controlled Entity
Company is made

JCA means where two or more parties jointly owns any asset .
For e.g: Oil pipeline owned by Indian Oil Co. Ltd & BPCL Ltd.
Separate Books of accounts are not prepared for such jointly owned asset.
Consolidation is not required since separate Books does not exists.
In case of JCA, Share in Asset, Joint Liability, Income and
Expense will be reported in Standalone Statement .

Accounting Treatment in Books of Joint Venture
Balance Sheet of One of the Joint Venturer
Share in JCA
Share in Liability
(in case loan taken to make that asset)
Profit & Loss of One of the Joint Venturer
By Share in Income
(In case any add income is earned)
To Share in Expenses

Where Operations are jointly conducted Generally this is done for economy of Operation.
In such Books of account of JCO are not maintained.
Hence no consolidation .
Share in Income, Expenses and Liability will be reported in
Stand alone Statement of venturer.

Venturer will not earn profit by selling/ Purchase of asset of its own shares in JV.
Venturer can recognize loss from transactions, if such loss is real/ supported by decline in Market Price .

Under this type of JV, a new entity is created for operation of
JV.
Such entity maintain its own Books of Account and such entity is consolidated using Proportionate Consolidation
Method.
Under Proportionate Consolidation Method :
• Assets and Liabilities are consolidated on Line by Line
Basis, Proportionately.
• Minority Interest is not recorded.
• Calculation of GW/ CR is similar to AS 21.

1. Nature of Joint Venture
2. If Investment in JV are disclosed during the year, than fact should be disclosed.
3. If Financial Statement of JCE are not updated before consolidation , fact should be maintained.
4. Any Contingent Liability of JV should be reported in
Venturer Book as contingent Liability to the extent expected.