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

question 15

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

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