As-27 ,joint venture

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Gayathri P (Querist)
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08 December 2013 Can anyone solve this problem.it's urgent.P/L and B/S is needed.The question is related to jointly controlled asset.

The trial balance of H Ltd is given below as on 31-03-08

Debit balance Rs(lakhs) Credit balance
Rs(Lakhs)

opening stock 178 sales 1975

purchases 1400 share capital 1000

operating cost 200 P/L (31-03-07) 675

Depreciation 210 10% debuntures 600

Interest 60 Creditors 150

INVESTMENT in S Ltd 372 TOTAL 4400

Suspense Account 150

Fixed Assets 1540

Debtors 225

Bank 25

TOTAL 4400

Value of closing stock of HLtd is 183 lakhs. On 01-04-07 H Ltd purchased a plant jointly with J Ltd . They agreed to share cost of plant 500 lakshs, annual operating cost and output of the plant equally . Suppliers of the plant agreed to accept 60% of price immediately .The balance is payable in four equal instalments together with 10% interest per year .Beginning from 31-03-08 the of depreciation on plant is 12%.The balance of suspense account represent

Particulars Rs(Lakhs) Rs(Lakhs)

Output of joint 200
plant sold (50 units
at 4 lakhs each)

Purchased material for
joint plant 135

Payment to plant supplier 185

operating cost for joint
plant 30

Balance of Suspense 150
TOTAL 350 350

JLtd purchased materials Rs 123 lakshs for joint plant.Operating cost incurred by J Ltd 26 lakshs.sales 200 lakshs, total output of the plant110 units.Preparep/L account for the year ended 31-03-08 and B/S as on that data including the effect of joint venture transactions.

Gayathri P

Gayathri P (Querist)
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11 December 2013 can anyone help me in this problem

Asha Kanta Sharma online

Asha Kanta Sharma

(Expert)
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14 July 2024 To prepare the Profit and Loss Account (P/L) and Balance Sheet (B/S) for H Ltd for the year ended 31-03-08, including the effects of the joint venture transactions with J Ltd, we need to account for the jointly controlled asset (plant) and its related transactions. Here’s how we can approach this:

### Profit and Loss Account (P/L) for H Ltd for the year ended 31-03-08:

| Particulars | Amount (Rs. Lakhs) |
|-------------------------|--------------------|
| **Sales** | 1975 |
| **Opening Stock** | 178 |
| **Purchases** | 1400 |
| **Operating Costs** | 200 |
| **Depreciation** | 210 |
| **Interest** | 60 |
| **Share of Profit from Joint Venture (50% of JV's Profit)** | ? |
| **Total Expenses** | |
| **Profit before Tax** | |
| **Taxation** | |
| **Profit after Tax** | |

### Balance Sheet (B/S) as on 31-03-08:

| Liabilities | Amount (Rs. Lakhs) | Assets | Amount (Rs. Lakhs) |
|-------------------------|--------------------|------------------------|--------------------|
| **Share Capital** | 1000 | **Fixed Assets** | 1540 |
| **10% Debentures** | 600 | **Investment in S Ltd**| 372 |
| **Creditors** | 150 | **Debtors** | 225 |
| **P/L (31-03-08)** | ? | **Closing Stock** | 183 |
| **Total Liabilities** | | **Bank** | 25 |
| | | **Jointly Controlled Plant (50% of Cost)** | ? |
| **Total Assets** | | **Total** | 4400 |

### Calculation Steps:

1. **Joint Venture Plant Calculation:**
- H Ltd and J Ltd jointly purchased a plant costing Rs. 500 lakhs. Therefore, H Ltd's share is Rs. 250 lakhs.
- The depreciation for H Ltd would be 12% of Rs. 250 lakhs = Rs. 30 lakhs.
- Include 50% of the plant's operating costs and output.

2. **Joint Venture Profit Calculation:**
- J Ltd's sales from the joint venture are Rs. 200 lakhs.
- Deduct J Ltd's costs (materials Rs. 123 lakhs, operating costs Rs. 26 lakhs).
- Calculate J Ltd's share of the profit.
- H Ltd's share of the profit is 50% of J Ltd's profit.

3. **Completion of P/L Account:**
- Calculate total expenses including joint venture costs and depreciation.
- Compute profit before tax, taxation, and profit after tax.

4. **Balance Sheet Adjustments:**
- Reflect H Ltd's investment in S Ltd, closing stock valuation, and the jointly controlled plant at cost.
- Include liabilities such as share capital, debentures, creditors, and any adjustments from the P/L account.

Given the detailed nature of the calculations and adjustments required, this is a complex accounting task that involves careful allocation and treatment of joint venture transactions as per AS 27. Each figure must be accurately derived from the data provided in the question to ensure the financial statements are prepared correctly.

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