ANSWEAR MCQs

1. Which of the following statements is correct?~ a. All joint arrangements which are not structured through a separate vehicle are classified as joint ventures. b. For a joint venture, the rights pertain to the rights and obligations associated with individual assets and liabilities, whereas with a joint operation, the rights and obligations pertain to the net assets. C. Where the joint operators have designed the joint arrangement so that its activities primarily aim to provide the parties with an output it will be classified as a joint venture.~ d. In considering the legal form of the separate vehicle if the legal form establishes rights to individual assets and obligations, the arrangement is a joint operation. If the legal form establishes rights to the net assets of the arrangement, then the arrangement is a joint venture.~ 2. A 50:50 joint operation was commenced between two participants. Mary Company contributed cash of $90 000, and Strickland Company contributed a Building with a fair value of $90 000 and a carrying amount of $75 000 Using the line-by-line method of accounting, Strickland Company would record: a DR Building in JO $75 000~ CR Building $75 000- b. DR Building in JO $945000~ CR Building $37 500- CR Gain on sale of building $7 500~ DR Investment in joint operation $45 000 CR Building $37 500- CR Gain on sale of building $7 500- d. DR Cash in JO $45 000 DR Building in JO $45 000~ CR Building $75 000- CR Gain on sale of building $15 000~ Q3-5 are based on the information as follows: On 1 July 2023 Perth Lid entered into a 50:50 joint operation with Tasmania Ltd to develop robotic home appliances. Each operator's initial contribution was $1 million. Perth contributed $500 000 cash and equipment with a fair value of $500 000 and a book value of $400 000. The remaining useful life of the equipment contributed by Perth is 5 years. Tasmania Lid contributed $1 million cash.~ Additional information: An extract of the joint operation's balance sheet at 30 June 2024 shows:~ Assets Cash 290,000 Raw materials 80,000 Work in progress 460,0004 Finished goods inventories 100,000 Equipment 500,000 less: Accumulated depreciation -100,000 Total Assets 1,330,000 Liabilities Accrued wages 40,000 Accounts payable 140,000 Total Liabilities~ $180,000 Net Assets 1,150,000 Production costs for the joint operation for the year ended 30 June 2024 were: Raw materials $420,000 Wages 340,000 Depreciation 100,000 Overhead expenses 550,000 4 Total production costs 1,410,000 Less Cost of inventories -950,000 4 Work in Progress at 30 June 2024 $460.000 Cash receipts and payments for the year ended 30 June 2024 were: Payments Receipts~ ~ Contributions $1,500,000 Wages $300,000 Raw materials 360,000 Overhead expenses 650,000 $1.210.000 . $1.500.000 . The following entries will form part of Perth Lid's initial contribution entry except for: DR Cash in JO account $750 000.~ DR Equipment in JO account $250 000.~ C . CR Cash $500 000.~ CR Gain on equipment $50 000.~ 4. Tasmania Lid's initial contribution entry will include a debit to the Cash in JO account of: a. $750 000.