03 January 2010
As per AS27, when the venturer sells an asset to a Jointly controlled entity (JCE) for a profit/ loss, the venturer will recognise only that part of the profit/ loss which belongs to other venturers- i.e. he will not recognise his own share of profit/ loss. Q 1) I don't understand the logic behind this. Q 2) I was discussing this with my friends, and they felt that since the venturer is selling the asset, the profit belongs to him, then why not to recognise his share? Q 3) Also, will there be any corresponding entry in the books of the other venturers?
03 January 2010
The logic is simple; one cannot make profit by selling something to oneself. On the other hand, mind you, one can incur loss by consuming something.
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