Description Zac Ltd and Tess Lid entered into a joint operation known as Trouble Ltd to collect and recycle empty water bottles from government departments on 1 January 2020. The joint operation agreement states that Zac Ltd and Tess Ltd will share output contributions and costs equally and that Zac Ltd and Tess Lid hold the joint Operation assets as tenants in common, with Zac Ltd and Tess Ltd each having a 50% interest The joint operation agreement established the initial contributions as follows: Assets Contribution: Zac Ltd Contribution: Tess Ltd Agreed Value Cost Agreed Value Cost $ 5 $ $ Cash 8.000.000 8.000.000 6.200.000 5,900,000 Building 9.700.000 10,000,000 6.200.000 6.800.000 Less accumulated depreciation (300.000) (700,000) Equipment 6.300.000 6,000,000 8.000.000 17.000.000 Less accumulated depreciation (500.000) (10,000,000) Total 22,200,000 21,100,000 22.200.000 21,100,000 Land The depreciation rates used by each of joint operators in their respective financial statements are Equipment 20% and Buildings 10% Both joint operator ayeed to record any depreciation of the joint operation using the straight-line method in their own separate financial statements. There are no residual values for the assets assigned to the joint operation The jont operators contributed, in total, a further $20,000,000 during the 2020 year with each joint Operator contributing the appropriate portion according to their original share in Trouble Lid. The joint operators chose not to revalue their remaining interests in the contributed assets in their separate recordo By agreement, Zac Lid will manage the joint operation project and will receive a management fee of $1,000,000 per annum. The management for has been treated as a period expense. $300,000 of this amount remains outstanding at 31 December 2020 and has been accrued in the Joint Operation Memorandum Accounts The joint operation purchased equipment for S5,000,000 on 1 January 2020, which had a useful to of 5 years, no residual value and was depreciated on the straight line basis. No sales of joint operation 2010 Extracts from the Joint Operation Memoranda Accounts for Trouble are provided below. Extracts from the Joint Operation Memoranda Accounts for Trouble are provided below: Statement of Total Costs of Production $ for year ended 31 December 2020 Wages and salaries 15,500,000 Supplies and materials 7.500,000 Management fee 1,000,000 Administration costs 6,000,000 Less: Work-in-progress inventories (WIP) 3,000,000 Cost of Production 27,000,000 Statement of Assets & Liabilities as at 31 December 2020 $ Land 6,200,000 Building 15.900.000 Equipment 19.300,000 Cash 9,000,000 Work-in-progress inventories (WIP) 3,000,000 Total assets 53,400,000 Management fee payable to Want Lid (300,000) Other accounts payable (15,700,000) Total liabilities (16,000,000) Instructions Required: . Using the above information, complete the test questions, by choosing the correct answer, or calculating the required amount Answer in accordance with the requirements of AASB 11 Joint Arrangements Calculate for Zac Ltd, Tess Ltd OR Trouble Ltd, depending on what the questions asks you for The journal entries relate to the period from 1 January 2020 to 31 December 2020 QUESTION 1 In the journal entry to record Zac Ltd's initial contribution on 1 January 2020. the following line will appear: a. Gain on sale of equipment (Cr) 400,000 Gain on sale of building (Cr) 100,000 C. Gain on sale of land (Cr) 300,000 Gain on sale of building (Cr) 50.000 e. Gain on sale of equipment (Cr) 7,000,000 d. QUESTION 2 In the journal entry to record Tess Ltd's initial contribution on 1 January 2020, the following line will appear: 12. Gain on sale of building (Cr) 100,000 b. Gain on sale of equipment (Cr) 500,000 C Gain on sale of equipment (Dr) 500,000 Gain on sale of equipment (Cr) 150.000 Gain on sale of equipment (Cr) 400,000 d. QUESTION 3 In the journal required to record depreciation expense for the year ended 31 December 2020 on the buildings and equipment that are utilised by the Trouble Joint Operation, in the books of Tess Ltd, what would be the amount for the account: Depreciation expense - Equipment QUESTION 4 In accounting for the Management Fees of the joint operation at the end of the reporting period, Zac Ltd would record an amount for Cash (Debit) of how much? QUESTION 5 At the end of the reporting period, each joint operator will record their share ofjo assets. On 31/12/2020, in Tess Ltd's books, what would be the amount recorded for Work-in-progress inventories (Dr)