A Ltd., a UK-based company, entered into a joint venture with B Ltd. in India, wherein B Ltd. will import the goods manufactured by A Ltd. on…

CA Intermediate · Advanced Accounting · MTP · September 2026
A Ltd., a UK-based company, entered into a joint venture with B Ltd. in India, wherein B Ltd. will import the goods manufactured by A Ltd. on account of the joint venture and sell them in India. A Ltd. and B Ltd. agreed to share the expenses & revenues in the ratio of 5:4 respectively, whereas profits are distributed equally. A Ltd. invested 49% of total capital but has an equal share in all the assets and is equally liable for all the liabilities of the joint venture. Following is the trial balance of the joint venture at the end of the first year: Particulars Dr. (₹) Cr. (₹) Purchases 9,00,000 Other Expenses 3,06,000 Sales 13,05,000 Property, Plant and Equipment 6,00,000 Current Assets 2,00,000 Unsecured Loans 2,00,000 Current Liabilities 1,00,000 Capital 4,01,000 1. Closing inventory was valued at ₹ 1,00,000. 2. You are required to prepare the Consolidated Financial Statement.

Suggested Answer and Working Notes:

Consolidated Profit & Loss Account Particulars Note No. (₹ ) Revenue from operations 1 13,05,000 Total Revenue (A) 13,05,000 Less: Expenses Purchases 2 9,00,000 Other expenses 3 3,06,000 Changes in inventories of finished goods 4 (1,00,000) Total Expenses (B) 11,06,000 Profit Before Tax (A-B) 1,99,000 Consolidated Balance Sheet Note No. (₹ ) I Equity and liabilities 1. Shareholders' funds: Share Capital 5 4,01,000 Reserves and Surplus 6 1,99,000 2. Non-current liabilities Long term borrowings 7 2,00,000 3. Current Liabilities 8 1,00,000 9,00,000 II Assets Non-current Assets Property, Plant and Equipment 9 6,00,000 Current Assets Inventories 10 1,00,000 Other current assets 11 2,00,000 9,00,000 Notes to Accounts Particulars (₹ ) 1. Revenue from operations Sales: A Ltd. 7,25,000 B Ltd. 5,80,000 13,05,000 2. Purchases A Ltd. 5,00,000 B Ltd. 4,00,000 9,00,000 3. Other expenses A Ltd. 1,70,000 B Ltd. 1,36,000 3,06,000 4. Closing Inventory A Ltd. 50,000 B Ltd. 50,000 1,00,000 5. Share Capital A Ltd. 1,96,490 B Ltd. 2,04,510 4,01,000 6. Reserves and Surplus Profit & Loss Account: A Ltd. 99,500 B Ltd. 99,500 1,99,000 7. Long Term Borrowings Unsecured Loans: A Ltd. 1,00,000 B Ltd. 1,00,000 2,00,000 8. Current Liabilities A Ltd. 50,000 B Ltd. 50,000 1,00,000 9. Property, Plant and Equipment A Ltd. 3,00,000 B Ltd. 3,00,000 6,00,000 10. Inventories A Ltd. 50,000 B Ltd. 50,000 1,00,000 11. Other Current Assets A Ltd. 1,00,000 B Ltd. 1,00,000 2,00,000

Topics: AS 27

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