Ind AS 111 (Joint Arrangements) is the Indian Accounting Standard that prescribes how entities with joint control must classify and account for joint arrangements as either joint operations or joint ventures.

The Ministry of Corporate Affairs notified Ind AS 111 via the Companies (Indian Accounting Standards) Rules, 2015. Voluntary adoption began from 1 April 2015 and mandatory Phase I application from 1 April 2016. It replaced AS 27 (Financial Reporting of Interests in Joint Ventures) for Ind AS-compliant companies.

For FY 2026-27, Ind AS 111 remains critical in sectors like infrastructure and oil and gas. Construction joint ventures may be classified as either joint operations or joint ventures based on legal structure and contractual terms, a distinction that drives financial reporting.

Ind AS 111 at a Glance

Ind AS 111 establishes the accounting framework for entities with interests in joint arrangements. Its core principle is to classify arrangements based on the rights and obligations of the parties, either as joint operations or joint ventures. Primary users include listed companies and large private entities applying Indian Accounting Standards.

What is Ind AS 111: Joint Arrangements?

Ind AS 111 defines how an entity must classify and account for arrangements where two or more parties share control by contract. The standard distinguishes between joint operations, where parties have direct rights to assets and obligations for liabilities, and joint ventures, where parties have rights only to net assets.

ICAI introduced this standard as part of India's convergence with International Financial Reporting Standards (IFRS), specifically aligning with IFRS 11. It replaced the earlier approach under AS 27 that relied heavily on proportionate consolidation without distinguishing between types of joint arrangements.

Finance teams, statutory auditors, CFOs, and CA students use this standard when analysing group structures involving shared control over business activities.

Objective of Ind AS 111

The objectives of Ind AS 111 are:

• Establish principles for financial reporting by entities that have interest in arrangements that are controlled jointly (joint arrangements).
• Distinguish joint operations from joint ventures based on rights and obligations of the parties.
• Specify accounting: line-by-line for joint operations; equity method for joint ventures.

These objectives ensure that financial statements present a true and fair view as required by Section 129 of the Companies Act, 2013. By requiring classification based on substance rather than form, the standard supports transparent group reporting aligned with international best practices.

Who Must Apply Ind AS 111?

Entities covered, applicability table

Ind AS 111 applies to all companies required to prepare financial statements under Indian Accounting Standards if they are party to a joint arrangement. Applicability follows the MCA's phased roadmap:

Entities within groups, including subsidiaries, must also apply this standard if they participate in any form of jointly controlled arrangement.

Scope exclusions

Ind AS 111 does not apply to:

• Investments in associates without joint control (covered by Ind AS 28).
• Subsidiaries where control exists (covered by Ind AS 110).
• Investments held by venture capital funds or mutual funds measured at fair value through profit or loss (FVTPL).

When the standard does not apply

If an investment is an associate without shared control, apply Ind AS 28. For subsidiaries where one entity controls another alone, use Ind AS 110. If investments are held by venture capital or mutual funds at FVTPL, measure them per relevant fair value standards instead.

Key Definitions under Ind AS 111

Recognition and Measurement under Ind AS 111

When to recognise

An entity recognises a joint arrangement when two or more parties share control through a contractual agreement requiring unanimous consent over relevant activities. Classification into a joint operation or a joint venture depends on whether parties have direct rights to assets and obligations for liabilities (joint operation), or rights only to net assets via a separate vehicle such as a company (joint venture), as specified in Para 14.

For example, if Ramesh Textiles Pvt Ltd enters into an agreement with Sundaram Infotech Pvt Ltd where both must agree unanimously on all key decisions regarding an industrial park project structured through a partnership deed, not through an incorporated company, the arrangement is likely classified as a joint operation.

Initial measurement

For a joint operation, each party recognises its share of assets, liabilities, revenues, and expenses directly in its own books, this is line-by-line accounting per Para 20. There is no single “investment” line item; instead each asset/liability/revenue/expense element appears proportionally according to contractual share.

For a joint venture, each party recognises its investment initially at cost in accordance with Para 24. Subsequent accounting follows the equity method prescribed by Ind AS 28: initial investment plus share of post-acquisition profits/losses less distributions received.

**Equity Method Formula:**

Carrying amount = Initial cost + Share of post-acquisition profit/loss + Share of OCI, Dividends/distributions received

Subsequent measurement

Joint operation: The entity continues recognising its direct share of each underlying asset/liability/revenue/expense throughout the life of the arrangement using line-by-line presentation. If facts or contractual terms change such that classification should be revisited, say if additional legal vehicles are introduced, the entity must reassess classification per Para 19.

Joint venture: The equity method continues post-initial recognition:

Adjust carrying amount for share in profit/loss.

Adjust for share in other comprehensive income.

Reduce carrying amount by distributions received.

Recognise impairment losses if applicable per Ind AS 36.

Reassessment is required only when there is evidence that facts and circumstances affecting classification have changed materially since inception.

The Classification Test - Vehicle Structure Drives Outcome

Ind AS 111 requires entities to classify every new jointly controlled arrangement using both legal form and substance:

• If structured through a separate vehicle such as an incorporated company or LLP, and contractual terms do not override, the arrangement is generally classified as a joint venture; accounting uses only equity method.
• If not structured through a separate vehicle, or if contractual terms specify direct rights over assets/liabilities despite legal form, the arrangement qualifies as a joint operation; here each party accounts line-by-line.
• Even when there is a separate vehicle present, overriding contractual clauses can result in classification as a joint operation if they grant direct rights/obligations rather than just net asset exposure.

This approach differs fundamentally from legacy practice under AS 27 which often defaulted to proportionate consolidation regardless of structure or substance.

Worked Examples on Ind AS 111

Example 1: Joint venture - separate vehicle

Narrative:

Maharashtra Holdings and Krishna Industries set up Maharashtra-Krishna JV Pvt Ltd, a separate company, to operate a port facility. Each holds fifty percent equity; all major decisions require unanimous consent per shareholder agreement. Maharashtra Holdings contributes Rs 200 crore as initial capital.

Computation Table

Journal Entry:

On contribution:

Dr Investment in JV Rs 200 crore

Cr Bank Rs 200 crore

Annual share of JV profit/loss recognised via equity method:

Dr Investment / Cr P&L (for share of profit); reverse entry for losses/distributions

No line-by-line consolidation applies.

Example 2: Joint operation - unincorporated arrangement

Narrative:

Three partner companies enter into a contractual agreement, no separate company formed, to construct and operate a tollway project. Each partner has direct ownership over specified portions of toll revenue streams and physical assets; each bears responsibility for specific liabilities tied directly to their portion.

Computation Table

Journal Entry:

Each partner records:

Dr Property, Plant & Equipment (their share)

Dr Other asset accounts / Cr Bank / Cr Liabilities

Cr Capital contributed

Annually:

Recognise revenue earned from tolls

Recognise expenses incurred, all line-by-line proportional shares

Disclosure Requirements under Ind AS 111

Disclosures under Ind AS 111 are essential to meet the transparency objectives of Schedule III to the Companies Act, 2013 and provide users with clarity on the nature, risks, and financial effects of joint arrangements. The standard requires detailed information about classification judgements, group composition, material joint ventures, restrictions on fund transfers, and risks.

Auditors must evaluate these disclosures for completeness and accuracy as part of their reporting responsibilities under SA 700.

Common Mistakes & Industry-Specific Considerations

Common errors auditors flag

• Classifying all joint arrangements as joint ventures by default without analysis of rights and obligations
• Continuing proportionate consolidation under AS 27 thinking after Ind AS transition
• Failing to reassess classification when contractual terms change
• Inadequate disclosure of significant judgements in classification
• Confusing joint control (unanimous consent on relevant activities) with majority control (Ind AS 110)
• Treating equity-accounted joint ventures with significant losses by recognising losses beyond carrying amount

Industry application notes

Infrastructure and EPC:

Construction joint ventures, road project SPVs, and port consortia may be structured as either joint operations or joint ventures. The legal structure and specific contractual terms determine whether line-by-line accounting or the equity method applies. This distinction has a direct impact on reported assets and liabilities.

Oil and gas:

Production sharing contracts and joint operating agreements typically qualify as joint operations under Ind AS 111. Each participant recognises its proportional share of production, costs incurred, assets owned, and liabilities assumed. This approach aligns reported results more closely with operational reality than previous standards.

Real estate development:

Joint development agreements between developers and landowners can fall into either category, joint operation or joint venture, depending on how rights to assets and obligations are structured. The chosen arrangement type significantly affects presentation in the balance sheet and profit & loss statement.

Ind AS 111 vs AS 27 vs IFRS: Key Differences

The following table summarises key differences between Ind AS 111, its predecessor AS 27 (for non-Ind AS companies), and IFRS 11:

India’s adoption of Ind AS 111 aligns closely with IFRS 11. The most significant carve-out is the elimination of proportionate consolidation for joint ventures in favour of the equity method, consistent with international practice but a marked departure from legacy Indian GAAP under AS 27.

Latest Amendments to Ind AS 111 (FY 2026-27)

No amendments have been notified to Ind AS 111 for FY 2026-27 as of 2026-05-02. The standard continues to apply in its existing form.

Related Standards You Should Know

• [AS 27](/as-27-financial-reporting-of-interests-in-joint-ventures/), Equivalent joint ventures standard for non-Ind AS companies; uses proportionate consolidation.
• [Ind AS 28](/ind-as-28-investments-in-associates/), Equity method applied to joint ventures.
• [Ind AS 110](/ind-as-110-consolidated-financial-statements/), Distinguishes control (subsidiaries) from joint control.
• [Ind AS 112](/ind-as-112-disclosure-of-interests-in-other-entities/), Disclosure requirements for joint arrangements.
• [Ind AS 27](/ind-as-27-separate-financial-statements/), Separate FS measurement choice extends to joint arrangement investments.

Need Help with Ind AS 111 Compliance?

Patron Accounting LLP supports companies across India in achieving full compliance with Ind AS 111 Joint Arrangements. Our team combines technical expertise with practical experience advising listed entities, NBFCs, infrastructure groups, and mid-market corporates.

Our services include:

• Statutory Audit
• Ind AS Advisory
• Financial Reporting & Schedule III Compliance
• Disclosure Review

Schedule a 30-minute consultation with our Ind AS team, Pune · Mumbai · Delhi · Gurugram.

About This Article

Reviewed by CA & CS Team · Patron Accounting LLP

Technical reviewer: CA Sundram Gupta, FCA

Last reviewed: 2026-05-02

Sources: ICAI Compendium of Accounting Standards · MCA Notification (Companies (Indian Accounting Standards) Rules, 2015, dated 16 February 2015) · IFRS Foundation