If a Venturer Contributes Assets to a Joint Venture,the Accounting

question 31

Multiple Choice

If a venturer contributes assets to a joint venture,the accounting treatment is which of the following:

• A) Treat the contribution as a capital investment and replace the asset with an investment account called 'advance to joint venture'.
• B) Close off the accumulated depreciation account if applicable to the asset account and remove the net book value of the other joint venturers' shares of the asset against the account 'advance to joint venture'. This leaves the venturer's own share in its own accounts.
• C) The value of the contribution is assessed at fair value and the other venturers' share of the asset is treated as sold at fair value.
• D) The asset is restated to fair value and the asset revaluation reserve treated as part of the advance to the joint venture.
• E) None of the given answers.

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Definitions:

Job Order Cost Accounting

A cost accounting system in which costs are assigned to specific jobs or batches and is used for custom orders.

T Accounts

A type of graphical representation used in accounting to depict accounts, where the left side of the "T" records debits and the right side records credits.

Transactions

Financial events that involve the transfer of resources between two parties, impacting the financial position of an entity.

Cost Flow

The process of tracking the progression of costs as they move through a company's production process and into the financial statements.