5 1.A Ltd. B Ltd and C Ltd commenced a joint operation on 1 January 2020. A Ltd contributed alicense with a fair value of $2.000.000. B Ltd and C Ltd each contributed $3,000,000 in cash.The book value of the license in the books of A Ltd as at the date of transfer was $1,400,000. ALtd does not revalue the license subsequent to the transfer to the joint operation. The license had aremaining life of 3 years as at the commencement of the joint operation. The residual value of thelicense at the end of the useful life is $ 0.Output from the joint operation is shared in the ratio of the contributions (25%, 37.5%and 37.5% for A Ltd, B Ltd and C Ltd respectively).The contractual arrangement establishes that each joint operator shares interest in assetsin proportion to their initial contributions.B Ltd uses the straight-line method to amortize intangibles.• The company income tax rate is 30%.Required: Calculate the carrying amount of the asset in the accounts of B Ltd at31 December 20202.A Ltd. Ora Ltd and D Ltd commenced a joint operation on 1 July 2016.A Ltd contributed a patent with a fair value of $2.100.000 and cash of $900.000. The patent had aremaining life of 8 years as at the commencement of the joint operation. Ora Ltd and D Ltd eachcontributed $3,000,000 in cash.Output from the joint operation is shared equally between the three joint operators.The book value of the patent in the books of A Ltd as at the commencement of the joint operationwas $800,000. There is not an active market for the patent and A Ltd does not revalue the patentsubsequent to the transfer to the joint operation.Required: The contribution journal entry in the books of A Ltd on 1 July 2016 must include:A. Cr Gain on sale of patent $866,667B. Cr Gain on sale of patent $650,000C. Cr Cash $3,000,000D.Dr Gain on sale of patent $433,333E. None of the other answer options is true

Joint Operation Accounting: When the two or more persons started business jointly then it is called…

Ltd contributed a patent with a fair value of $2.100.000 and cash of $900.000. The pa emaining life of 8 years as at the commencement of the joint operation. Ora Ltd and D ontributed $3,000,000 in cash. Output from the joint operation is shared equally between the three joint operators. The book value of the patent in the books of A Ltd as at the commencement of the joint was $800,000. There is not an active market for the patent and A Ltd does not revalue

Ltd contributed a patent with a fair value of $2.100.000 and cash of $900.000. The pa emaining life of 8 years as at the commencement of the joint operation. Ora Ltd and D ontributed $3,000,000 in cash. Output from the joint operation is shared equally between the three joint operators. The book value of the patent in the books of A Ltd as at the commencement of the joint was $800,000. There is not an active market for the patent and A Ltd does not revalue

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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