Happy Ltd, Go Ltd and Lucky Ltd contractually form a jointly controlled operation on 1 July 2003. The three companies agree to contribute the following amounts of capital to the venture in the same proportion as their rights to the assets and outputs:

The funds are used on 1 July 2003 to purchase land for $15 million and equipment for $5 million. The balance of $10 million will be called on by the joint venture manager as required. Go Ltd and Lucky Ltd borrowed $10 million and $3 million respectively to finance their contributions to the joint venture.
The following information relates to the year ending 30 June 2004:
Total cost of production $6 million. These costs have been deferred in order to amortise them as production commences.
Of the total costs of production all but $1.5 million has been paid in cash.
The joint venture manager called on the venturers to contribute a further $8 million in total with each venturer contributing the appropriate portion according to its share in the joint venture (provided above).
What entries would be required to record the formation of the joint venture and the transactions for the year ended 30 June 2004?
E) None of the given answers.

Question

Happy Ltd, Go Ltd and Lucky Ltd contractually form a jointly controlled operation on 1 July 2003. The three companies agree to contribute the following amounts of capital to the venture in the same proportion as their rights to the assets and outputs:

The funds are used on 1 July 2003 to purchase land for $15 million and equipment for $5 million. The balance of $10 million will be called on by the joint venture manager as required. Go Ltd and Lucky Ltd borrowed $10 million and $3 million respectively to finance their contributions to the joint venture.
The following information relates to the year ending 30 June 2004:
Total cost of production $6 million. These costs have been deferred in order to amortise them as production commences.
Of the total costs of production all but $1.5 million has been paid in cash.
The joint venture manager called on the venturers to contribute a further $8 million in total with each venturer contributing the appropriate portion according to its share in the joint venture (provided above).
What entries would be required to record the formation of the joint venture and the transactions for the year ended 30 June 2004?
E) None of the given answers.

Quizplus · Accepted Answer

The Answer of Happy Ltd, Go Ltd and Lucky Ltd contractually form a jointly controlled operation on 1 July 2003. The three companies agree to contribute the following amounts of capital to the venture in the same proportion as their rights to the assets and outputs:

The funds are used on 1 July 2003 to purchase land for $15 million and equipment for $5 million. The balance of $10 million will be called on by the joint venture manager as required. Go Ltd and Lucky Ltd borrowed $10 million and $3 million respectively to finance their contributions to the joint venture.
The following information relates to the year ending 30 June 2004:
Total cost of production $6 million. These costs have been deferred in order to amortise them as production commences.
Of the total costs of production all but $1.5 million has been paid in cash.
The joint venture manager called on the venturers to contribute a further $8 million in total with each venturer contributing the appropriate portion according to its share in the joint venture (provided above).
What entries would be required to record the formation of the joint venture and the transactions for the year ended 30 June 2004?
E) None of the given answers.

Happy Ltd, Go Ltd and Lucky Ltd Contractually Form a Jointly