A 60:40 Joint Operation Was Commenced Between Two Participants $\begin{array} { l l l } \text { DR } & \text { Cash in JO } & \$ 30,000 \\\text { CR } & \text { Obligation to JO } & \$ 30,000 ;\end{array}$

question 4

Multiple Choice

A 60:40 joint operation was commenced between two participants. Participant One contributed cash of $60 000, and Participant Two agreed to provide technical services to the joint operation over a period of two years. The fair value of the services was determined to be $40 000 and the cost to provide the services was estimated to be $35 000 Using the line-by-line method of accounting, participant Two would record:

• A) \(\begin{array} { l l l }
• \text { DR } & \text { Cash in JO } & \$ 30,000 \\
• \text { CR } & \text { Obligation to JO } & \$ 30,000 ;
• \end{array}\)
• B) \(\begin{array}{lll}\text { DR }&\text { Cash in JO }&\$24,000\\
• \text { CR } & \text { Obligation to JO } & \$ 21,000 \\
• \text { CR } & \text { Profit on provisions of services } & \$ 3,000:
• \end{array}\)
• C) \(\text { DR\quad Cash in JO } \quad \$ 24,000\)
• \(\text { CR } \quad \text { Obligation to JO } \quad \$ 24,000 \text {; }\)
• D) \(\begin{array}{lll}
• \text { DR } & \text { Cash in JO } & \$ 24,000 \\
• \text { DR } & \text { Receivable in JO } & \$ 16,000\\
• \text { CR }&\text { Obligation to } \mathrm{JO}&\$40,000
• \end{array}\)

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Definitions:

Statement Of Income

A financial document showing a company's revenue, expenses, and net income over a specific period.

Classifying Expenses

The process of organizing expenses into categories for financial reporting and analysis.

ASPE

A collection of accounting norms applicable to private entities in Canada, known as Accounting Standards for Private Enterprises.

Statement Of Income

A financial report that provides a summary of a company's revenues, expenses, and profits over a specific period of time, often referred to as a profit and loss statement.