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  1. business
  2. accounting
  3. (d) entity k is owned by three institutional inves

(d) Entity K is owned by three institutional investors - M Limited, N Limited and...

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Accounting

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(d) Entity K is owned by three institutional investors - M Limited, N Limited and C Limited - holding 40%, 40% and 20% equity interest respectively. A contractual arrangement between M Limited and N Limited gives them joint control over the relevant activities of Entity K. It is determined that Entity K is a joint operation (and not a joint venture). C Limited is not a party to the arrangement between M Limited and N Limited. However, like M Limited and N Limited, C Limited also has rights to the assets, and obligations for the liabilities, relating to the joint operation in proportion of its equity interest in Entity K. Would the manner of accounting to be followed by M Limited and N Limited on the one hand and C Limited on the other in respect of their respective interests in Entity K be the same or different? You are required to explain in light of the relevant provisions in the relevant standard in this regard. (4 Marks)

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