Sunny Ltd,Rain Ltd and Cloud Ltd Contractually Form a Jointly

question 17

Multiple Choice

Sunny Ltd,Rain Ltd and Cloud Ltd contractually form a jointly controlled operation on 1 July 2005.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 2005 to purchase land for a mining site for $65 million and machinery and equipment for $25 million.The balance of $30 million will be called on by the joint venture manager as required.Sunny Ltd and Cloud Ltd borrowed $10 million and $30 million respectively to finance their contributions to the joint venture.
The following information relates to the year ending 30 June 2006:
Total cost of production $15 million.These costs have been deferred in order to amortise them as production commences.
Of the total costs of production all but $3 million has been paid in cash.
The joint venture manager called on the venturers to contribute a further $20 million in total with each venturer contributing the appropriate portion according to their 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 2006?

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Definitions:

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The return an investor realizes on a bond, calculated as the coupon payments received from the bond relative to its price or face value.

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