Question

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.

Answer 1

Ans: As per HOMEWORKLIB RULESs, I can answer only four questions.

1. In the journal entry to record Zac Ltd's initial contribution on 1 january,2020 the following line will appear

Gain on sale of Land $300000.

Calculation-

= Agreed value of Land- Cost of Land

= $6200000-$5900000

= $300000

2. In the journal entry to record Tess Ltd's initial contribution on 1 january,2020 the following line will appear

Gain on sale of Building $100000.

Calculation-

= Agreed value of Building- Cost of Building net of depreciation

= $6200000-($6800000-$700000)

= $100000

3. The amount in the account of Depreciation expense-Equipment utilised by the Trouble Join operation in the books of Tess ltd will be $1600000 ($8000000 * 20%)

4. In accounting for the management fees of the joint operation, at the end of the reporting period, Zac Ltd will record an amount for cash debit of $300000

As per the agreement, Zac Ltd alone will manage the joint operation project and therefore, it will be entitled for full amount of management fee and thus the outstanding amount of $300000 under joint operational memorandum accounts will belong to Zac Ltd.