Exam 32: Joint Arrangements

On 1 July 2023, Perth Ltd entered into a 50:50 joint operation with Hobart Ltd to develop robotic home appliances. Each operator's initial contribution was $1 million. Perth contributed $500 000 cash and equipment with a fair value of $500 000 and a book value of $400 000. The remaining useful life of the equipment contributed by Perth is 5 years. Tasmania Ltd contributed $1 million cash. Additional information: An extract of the joint operation's balance sheet at 30 June 2024 shows: Assets \ Cash 290,000 Raw materials 80,000 Work in progress 460,000 Finished goods inventories 100,000 Equipment 500,000 less: Accumulated depreciation -100,000 Total Assets 1,330,000 Liabilities Accrued wages 40,000 Accounts payable 140,000 Total Liabilities \ 180,000 Net Assets Production costs for the joint operation for the year ended 30 June 2024 were: Raw materials \ 420,000 Wages 340,000 Depreciation 100,000 Overhead expenses 550,000 Total production costs 1,410,000 Less Cost of inventories -950,000 Work in Progress at 30 June 2024 \ 460,000 Cash receipts and payments for the year ended 30 June 2024 were: Payments Receipts Contributions \1 ,500,000 Wages \ 300,000 Raw materials 360,000 Overhead expenses 550,000 \1 ,210,000 \1 ,500,000 By 30 June 2024, Tasmania Ltd has sold all of the robotic appliances distributed to it by the joint operation and Perth has sold 60% of its distribution of robotic appliances. The value of these inventories sold by Perth Ltd is:

Four joint operators agree to an arrangement in which they have an equal share in a joint operation that produces sunflower oil. The work undertaken in setting up the joint operation cost $200 000 and each operator contributed in cash. Each operator will need to recognise the following accounting entry:

Which of the following statements is correct?

A 70:30 joint operation was commenced between two participants. Marian Limited contributed cash of $210 000, and Keyes Limited agreed to provide technical services to the joint operation over a period of three years. The fair value of the services was determined to be $90 000 and the cost to provide the services was estimated to be $81 000. Using the line-by-line method of accounting, Keyes Limited would record which of the following entries?

When a joint operator is accounting for an interest in a joint operation it is required to recognise which of the following in its financial statements? I II III IV The assets that it controls Yes Yes Yes Yes The liabilities that it incurs No Yes No Yes Its share of incorne from the sale of goods by the joint operation No No Yes Yes The expenses that it incurs No No No Yes

Cash contributed to a joint operation was used to purchase machinery ($500 000) and raw materials ($120 000). The following entry would be part of the overall recording of these transactions: