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Walmart entered into business with FarmBoy this year. Walmart contributed 75% of the initial investment and FarmBoy contributed 25%. The joint arrangement was correctly determined
Walmart entered into business with FarmBoy this year. Walmart contributed 75% of the initial investment and FarmBoy contributed 25%. The joint arrangement was correctly determined to be a joint operation. At the end of the first year, the joint operation owned $200,000 of property, plant and equipment (PPE).
Walmart is preparing its annual financial statements and would like to know how to account for the PPE in the joint operation. Select the correct response.
Walmart, using proportionate consolidation, should add $100,000 to its own PPE account balance. | |
Walmart, using proportionate consolidation, should add $150,000 to its own PPE account balance. | |
Walmart, using proportionate consolidation, should add $200,000 to its own PPE account balance. | |
Walmart should not add anything to its PPE balance because it's a joint operation, not a joint venture. |
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