A Joint Operation Holds Equipment with a Carrying Amount of $1

question 1

Multiple Choice

A joint operation holds equipment with a carrying amount of $1 200 000. The two joint operators participating in this arrangement share control equally. They also depreciate equipment using the straight-line method. The equipment has a useful life of 5 years. At reporting date each joint operator must recognise the following entry, in relation to depreciation, in its records:

• A) DR Depreciation $240 000.
• B) DR Depreciation $120 000.
• C) DR Investment in joint operation $240 000.
• D) DR Assets in joint operation $120 000.

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Definitions:

Incremental Value

The additional value or benefit gained from undertaking a new project or investment, compared to not doing it.

Cash Deal

A type of financial transaction where the payment for goods or services is made in cash at the time of the deal, without using credit.

Incremental Value

The additional value generated by undertaking a particular action, such as an investment or project.

Shares Outstanding

The total number of a company's shares of stock that are owned by shareholders, including both public investors and company officers or insiders.