Happy Ltd,Go Ltd and Lucky Ltd Contractually Form a Jointly

question 58

Multiple Choice

Happy Ltd,Go Ltd and Lucky Ltd contractually form a jointly controlled operation on 1 July 2003.The three companies agree to contribute the following amounts of capital to the venture in the same proportion as their rights to the assets and outputs: The funds are used on 1 July 2003 to purchase land for $15 million and equipment for $5 million.The balance of $10 million will be called on by the joint venture manager as required.Go Ltd and Lucky Ltd borrowed $10 million and $3 million respectively to finance their contributions to the joint venture.
The following information relates to the year ending 30 June 2004:
Total cost of production $6 million.These costs have been deferred in order to amortise them as production commences.
Of the total costs of production all but $1.5 million has been paid in cash.
The joint venture manager called on the venturers to contribute a further $8 million in total with each venturer contributing the appropriate portion according to its share in the joint venture (provided above) .
What entries would be required to record the formation of the joint venture and the transactions for the year ended 30 June 2004?

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Definitions:

Systematic Desensitization

A behavioral therapy technique used to gradually reduce anxiety or phobia by having the patient confront a feared object or context in a controlled manner.

Shaping

A behavior modification technique involving the reinforcement of closer approximations of a desired behavior until the exact behavior is achieved.

Systematic Desensitization

A behavioral therapy technique used to reduce phobic responses and anxiety through gradual exposure to the feared object or situation coupled with relaxation exercises.

Skinner's Method

A behavioral approach developed by B.F. Skinner that emphasizes the role of reinforcement in shaping behavior through conditioning.