A 40% Venturer in a Jointly Controlled Operation Sells an Asset

question 5

Multiple Choice

A 40% venturer in a jointly controlled operation sells an asset to the joint venture.The asset has a fair value of $5 000 000.The carrying amount in the books of the venture was $4 000 000.The profit to be recognised by the venturer is:

• A) $5 000 000.
• B) $4 000 000.
• C) $1 000 000.
• D) $600 000.

Comprehend the impact of transactions on Owner's Equity.

Identify the steps and functions of the accounting process.

Distinguish between bookkeeping and accounting.

Recognize the application of the accounting equation in business transactions.

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Definitions:

Legal Title

The recognized legal ownership of property or assets, which includes the rights to use, sell, or transfer the property.

FOB Destination

A shipping term where the seller retains the risk of loss until the goods reach the buyer's location and are ready for unloading.

Inventory Cost Flow

The method used to determine the cost of inventory sold and remaining in stock.

Ending Inventory

Ending inventory refers to the total value of goods available for sale at the end of an accounting period, crucial for calculating cost of goods sold and gross profit.