Exam 29: Joint Arrangements

A 50:50 joint operation was commenced between two participants. Participant One contributed cash of $50 000, and Participant Two contributed a Building with a fair value of $50 000. Using the line-by-line method of accounting, participant One would record:

Which of the following is correct?

A 50:50 joint operation was commenced between two participants. Participant One contributed cash of $50 000, and Participant Two contributed a Building with a fair value of $50 000 and a carrying amount of $40 000. Using the line-by-line method of accounting, Participant Two would record:

The following information relates to questions On 1 July20X0, Abel Ltd entered into a 50:50 joint operation with Tasman Ltd to develop an oil field off the south coast of Tasmania. Each operator's initial contribution was $2 million. Abel contributed $1 million cash and equipment with a fair value of $1 million and a book value of $500 000. Tasman's contributed $2 million cash. Additional information Production costs for the JO for the year ended 30 June 20X1 were: 00 Purchases 750 Wages 1300 Management fee 400 Total production costs 2450 Less: Work in progress (650) Cost of production 1,800 The remaining useful life of the equipment contributed by Abel is 5 years. Tasman is responsible for the day to day management of JO and has recognised the management fee received during the year as revenue. The costs of providing these management services to JO was $225 000. Tasman has sold all of the oil distributed to it and Abel has sold 50% of the oil distributed to it by 30 June 20X1. An extract of JO's balance sheet at 30 June 20X1 shows: 00 Assets Cash 650 Work in progress 650 Finished goods inventory 100 Plant \& equipment 1000 Accounts payable (100) Net assets 2,300 -The value of inventory distributed to Abel Ltd by the joint venture and subsequently sold by 30 June 20X1 is:

The particular relationship between parties that signifies the existence of a joint arrangement is: