Accounting for Jointly Controlled Entities Essay

Accounting for Jointly Controlled Entities - Essay Example 2. Similarly venturer share in income and expenses in each transaction of the consolidated joint venture income statement shall be shown as separate line item under income and expenses of same nomenclature of venturer own Income statement. 4. Balance sheet will not carry a separate ‘investment account with joint venture’ as total of each asset and liability under each head will include assets and liabilities of venturer own business and those of his share in joint venture business. As per IAS 31.341, the venturer under this method may combine his share of assets, liabilities, income, and expenditure under each head in the consolidated joint venture financial statements with the venturer own assets, liabilities, income, and expenditure in the consolidated venturer financial statements. In other words items are not shown separately but only a combined figure is shown for each item in venturer financial statements. 2. Share of income from the joint venture investment is added to the capitalized investment and corresponding credit may be reflected in the statement of retained income or may be brought through by adding that to income of venturer in the venturer income statement. 4. In the financial statements of the venturer, final balance in ‘investment in joint venture’ shall now be shown as fixed assets investments either at cost or at valuation as provided in FRS 9(20)2. 5. It is important to note that when an investment in joint venture is sold, the equity method is applied till the date of sale of such investment after recognizing the gain or loss from such investment. A gain or loss to be recognized under such circumstances shall be equal to the difference between carrying value of investment and the sale consideration of the investment. Equity method is applied to an investment where the investor has