A Ltd and B Ltd Have Established the AB Joint

question 12

Multiple Choice

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 A 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 $54 000.
• C) Credit against the plant of $120 000.
• D) Credit against the gain on sale of plant of $18 000.

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Definitions:

Stoicism

An ancient Greek philosophy that teaches the development of self-control and fortitude as a means of overcoming destructive emotions and achieving personal tranquility.

Hedonism

A philosophy that argues that the pursuit of pleasure and intrinsic goods are the primary or most important goals of human life.

Unforeseen

Situations or outcomes that were not anticipated or predicted.

Beyond Our Control

Refers to situations or events that cannot be influenced or directed by individuals due to external factors.