Cancun Corporation Has a Joint Process Which Produces Three Products

question 17

Multiple Choice

Cancun Corporation has a joint process which produces three products: X, Y, and Z. Each product may be sold at split- off or processed further and then sold. Joint processing costs for a year amount to $100,000. Other relevant data are as follows: $\begin{array}{llll}&&\text { Separable }\\&&\text { Processing }\\\text { Product } & \begin{array}{l}\text { Sales Value at } \\\text { Split-off }\end{array} & \begin{array}{l}\text { Costs after } \\\text { Split-off }\end{array} & \begin{array}{l}\text { Sales Value at } \\\text { Completion }\end{array}\\\mathrm{X} & \$ 128,000 & \$ 16,000 & \$ 160,000 \\\mathrm{Y} & 75,000 & 26,000 & 99,000 \\\mathrm{Z} & 32,600 & 20,000 & 50,000\end{array}$ Once product X is produced, processing it further will cause profits to:

• A) decrease by $16,000
• B) increase by $16,000
• C) decrease by $32,000
• D) increase by $32,000

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Definitions:

IFRS

A collection of global accounting standards, International Financial Reporting Standards dictate the reporting methods for specific transactions and events in financial statements.

Other Comprehensive Income (OCI)

Items of income and expense that are not included in net income but directly affect equity, such as changes in the value of foreign investments.

Statement of Changes

A financial report detailing the changes in equity of a company over a period, including transactions with shareholders and comprehensive income.

Stockholders' Equity

A company's net worth derived from the difference between its total assets and total liabilities, representing the ownership interest of its shareholders.