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AS 27: Financial Reporting of Interests in Joint Ventures

A professional application note for accounts teams: what the standard controls, where it appears in company accounting, how to apply it and what evidence reviewers expect. Animated notes with Play, Pause, Replay, English and Hindi voice options are included below.

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AS 27: Financial Reporting of Interests in Joint Ventures: interactive explanation

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Professional scope: This is an implementation-oriented explanation for accountants, finance managers, controllers and reviewers responsible for company accounts.

1. What this standard controls

Jointly controlled operations, assets and entities are accounted for according to the rights and obligations arising from contractual joint control.

Current position: Included in the ICAI Accounting Standards framework, subject to entity applicability, notified rules and later amendments.

2. Where it appears in the real accounting world

01Joint manufacturing or project arrangements
02Jointly owned assets
03Jointly controlled entities
04Changes in joint-control terms

3. Practical application workflow

  1. Read the contractual arrangement and identify joint control.
  2. Classify the arrangement as operations, assets or entity under the AS framework.
  3. Recognise direct assets, liabilities, income and expenses where applicable.
  4. Apply proportionate consolidation for jointly controlled entities as required.
  5. Eliminate relevant unrealised profits and prepare disclosures.

4. Real-world application example

Two companies jointly control a project entity and decisions require unanimous consent. Each venturer recognises its proportionate share in consolidated reporting under the applicable AS 27 treatment.

5. Journal-entry and accounting record pattern

Jointly controlled operationRecognise the venturer’s own assets, liabilities, expenses and share of income.
Jointly controlled entityRecord proportionate-consolidation adjustments in consolidated financial statements.

Entry wording is illustrative. Actual accounts, tax effects, dimensions and narration depend on the entity’s chart of accounts and facts.

6. Month-end and year-end control file

Controls to operate

  • Joint-venture agreement summary.
  • Unanimous-decision and control assessment.
  • Standard JV reporting pack.
  • Inter-venturer transaction review.
  • Ownership and control-change monitoring.

Common errors and red flags

  • Calling a minority investment a joint venture without contractual joint control.
  • Using ownership percentage alone.
  • Ignoring jointly controlled assets held directly.
  • No policy alignment in proportionate consolidation.
  • Missing unrealised-profit adjustments.

7. Reviewer questions

  1. Which decisions require unanimous consent?
  2. What rights and obligations arise directly?
  3. What classification applies?
  4. Are reporting policies and dates aligned?
  5. Are transactions between venturer and JV adjusted?

Related standards: AS 18, AS 21, AS 23

Authoritative reference:

Before approving a material conclusion, check the latest ICAI compendium, notified Companies (Accounting Standards) Rules, entity applicability and subsequent amendments.

ICAI Accounting Standards Compendium →
Companies (Accounting Standards) Rules and amendments →

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Professional note: This educational resource does not replace entity-specific analysis, the latest notified standard, law, regulation, audit judgment or professional advice.