On January 1, Year 8, Shuswap Inc. and Kalamalka Inc. formed a new joint venture, Okanagan Inc. Shuswapcontributed equipment with a book value of $900,000 and a fair value of $2,100,000 for a 50% interest inthe joint venture. On December 31, Year 8, Okanagan Inc. reported a net income of $612,000. Theequipment transferred has an estimated useful life of 20 years. Ignore taxes. Assume the transaction doesnot have commercial substance because the equipment will be used for the same purpose by Okanagan.Calculate the gain on the contribution of equipment and prepare the journal entries for Shuswap Inc. torecord the events on January 1 and December 31, Year 8, including Shuswap's share of profit.

In a joint venture, the rewards and risks are shared. Each participant contributes resources, and…

Answered: On January 1, Year 8, Shuswap Inc. and…

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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