The Following Information Relates to Questions

The following information relates to Questions
A Ltd and B Ltd have established the AB Joint Operation. A Ltd has a 60% interest in the joint operation and B Ltd has a 40% interest.

A Ltd contributed an asset with a carrying amount of $90,000 and a fair value of $120,000 and B Ltd agreed to provide technical services to the joint operation over the first two years of operations. The fair value of the technical services was agreed to be $80,000 and the cost to provide the services was estimated at $65,000 at the inception of the joint operation.

-As part of its initial contribution entry B Ltd will record a:

A) Debit against the Services Receivable in JO account of $32,000;
B) Debit against the Plant in JO account of $36,000;
C) Credit against the Obligation to JO of $39,000;
D) Credit against the Gain on Provision of Services of $6,000.

Correct Answer:

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