At the Reporting Date,June 30 20X7,the Effect of the Adjustments

question 3

Multiple Choice

At the reporting date,June 30 20X7,the effect of the adjustments to record the interest of Midstream Ltd in the joint venture would be:

• A) Debit Deferred Exploration Expenditure $2,650,000, Credit Interest Revenue $150,000, Credit Investment in Joint Venture $2,500,000.
• B) Debit Deferred Exploration Expenditure $2,650,000, Debit Cash $1,000,000, Debit Plant and Equipment $2,500,000, Credit Accumulated Depreciation - Plant $500,000, Credit Sundry Liabilities $500,000, Credit Interest Revenue $150,000 and Credit Investment in Joint Venture $5,000,000.
• C) Debit Exploration Expense $2,650,000, Credit Interest Revenue $150,000 and credit Investment in Joint Venture $2,500,000.
• D) None of the above.

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Definitions:

Financing Provided

Funds supplied to businesses or individuals for the purpose of investing, expansion, or operating expenses that are expected to be repaid in the future.

Retained Earnings

The segment of net profits that are not distributed as dividends, instead kept within the company for reinvestment in its main operations or for debt repayment.

Current Asset

A slightly different term for assets likely to be used or turned into cash within one fiscal year or operating cycle, emphasizing liquidity.

Land

An asset representing the earth's surface that a company owns, used for operations, development, or investment.