X Ltd and Y Ltd

question 39

Essay

X Ltd. and Y Ltd. formed a joint venture on joint venture called XY Inc. on January 1, 2018. X Ltd. Invested contributed equipment with a book value of $600,000 and a fair value of $2,100,000 for a 50% interest in the joint venture. On December 31, 2018, XY Inc. reported a net income of $612,000. The equipment transferred has an estimated useful life of 20 years. Ignore taxes.
Calculate the gain on the contribution of equipment and prepare the journal entries to record the events on January 1 and December 31, 2018. Also calculate under the equity method X Ltd.'s share of net income and the amount it will recognize.

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Definitions:

Psychological Adjustment

The process of adapting or coping with personal and environmental demands and stresses in an effective way.

Health Complaints

Reports of physical or mental issues, whether medically explained or not, that an individual believes impact their well-being.

Rational-Emotive Behavior Therapy

An approach to therapy that focuses on altering clients’ patterns of irrational thinking to reduce maladaptive emotions and behavior.

Albert Ellis

An American psychologist who pioneered the development of Rational Emotive Behavior Therapy (REBT), an approach focused on changing irrational beliefs.