A 70:30 Joint Operation Was Commenced Between Two Participants

question 24

Multiple Choice

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?

• A) DR Cash in JO $90 000 CR Obligation to JO $90 000
• B) DR Cash in JO $63 000 CR Obligation to JO $56 700
• CR Profit on provisions of services $ 6 300
• C) DR Cash in JO $81 000 CR Obligation to JO $81 000
• D) DR Cash in JO $81 000 DR Receivable in JO $ 9 000
• CR Obligation to JO $90 000

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