In July 20X6,Midstream Ltd Entered into a Joint Venture Operation

question 27

Multiple Choice

In July 20X6,Midstream Ltd entered into a joint venture operation with Delta Ltd to explore for minerals in the area of interest KP97.Midstream Ltd contributed $5 000 000 in cash and Delta Ltd contributed specialised drilling equipment with an agreed fair value of $5 000 000.The venturers shared control of the operation.All the assets of the operation were held by the venturers as tenants in common.The estimated useful life of the plant was five years.In the accounts of Delta Ltd,this equipment was carried at cost $6 000 000 less accumulated depreciation $3 000 000.For the year ended 30 June 20X7,the following financial statements were prepared by the joint venture manager (amounts in thousands) : Balance Sheet as at 30 June 20X7
$\begin{array}{lll}\text { Assets }\\\text {Cash }&\$2000\\\text {Equipment (net of accumulated depreciation \( \$ 1000 \) ) }&4000\\\text { Total assets } & \$ 6000 \\\text { Less liabilities } & 1000\\\text { Venture capital }&\$5000\end{array}$
Performance Statement for the Year ended 30 June 20X7
Interest revenue $\quad$$\quad$$\quad$ $300
Explaration expenditure $\quad$$\quad$ 5300 At 30 June 20X7,the exploration had not yet advanced to the stage where a reliable estimate could be made of the recoverable mineral reserves in KP97.
The journal entry to record the initial investment of Delta Ltd would be:

• A) Debit Investment in Joint Venture $5 000 000, Credit Plant and Equipment $6 000 000, Debit Accumulated Depreciation $3 000 000, Credit Gain on Disposal of Property, Plant and Equipment $1 000 000, Credit Unearned Income $1 000 000.
• B) Debit Cash $2 500 000, Debit Plant $2 500 000, Credit Plant and Equipment $6 000 000, Debit Accumulated Depreciation $3 000 000, Credit Gain on Disposal of Property, Plant and Equipment $1 000 000, Credit Unearned Income $1 000 000.
• C) Debit Investment in Joint Venture $5 000 000 and Credit Plant Disposal account $5 000 000.
• D) None of the above.

Understand and describe the theories of social structure proposed by key sociologists like Karl Marx and Max Weber.

Recognize and explain social mobility and its forms, along with factors influencing it.

Analyze the relationship between family size and social class.

Describe the implications of background and wealth on spending habits and social status.

---

Definitions:

Hindsight Bias

The inclination to feel that one would have foreseen or anticipated the result after an event has taken place.

Other-Race Effect

The tendency to recall faces of one’s own race more accurately than faces of other races. (Also called the crossrace effect and the own-race bias.)

Unconscious Patronization

Actions or speech that belittle someone without the awareness of the person engaging in such behavior.

Hindsight Bias

The tendency to believe, after an event has occurred, that one would have predicted or expected the outcome.