The Following Information Relates to Questions

question 20

Multiple Choice

The following information relates to Questions
A Ltd and B Ltd have established the AB Joint Operation. A Ltd has a 60% interest in the joint operation and B Ltd has a 40% interest.

A Ltd contributed an asset with a carrying amount of $90,000 and a fair value of $120,000 and B Ltd agreed to provide technical services to the joint operation over the first two years of operations. The fair value of the technical services was agreed to be $80,000 and the cost to provide the services was estimated at $65,000 at the inception of the joint operation.

-As part of its initial contribution entry B Ltd will record a:

• A) Debit against the Services Receivable in JO account of $32,000;
• B) Debit against the Plant in JO account of $36,000;
• C) Credit against the Obligation to JO of $39,000;
• D) Credit against the Gain on Provision of Services of $6,000.

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Definitions:

Next Dividend

The upcoming payment declared by a company's board of directors to be distributed among shareholders.

Current Stock Price

The most recent price at which a stock was traded on a public exchange.

Required Return

The minimum rate of return on an investment deemed acceptable to an investor, considering its risk level.