Sting Ltd and Pink Ltd Enter into a Contractual Agreement

Sting Ltd and Pink Ltd enter into a contractual agreement to form a joint arrangement which is considered to be a joint operation on 1 July 2014.Sting Ltd is to contribute land and production buildings and equipment.Pink Ltd agrees to contribute $8.1 million in cash.It is agreed that they will share output,assets and future contributions in the ratio 50: 50.The following information relates to the contribution by Sting Ltd. $$\begin{array} { | l | r | r | } \hline & \begin{array} { r } \text { Book value } \\( \$ 000 ) \end{array} & \begin{array} { r } \text { Fair value (agreed) } \\( \$ 000 ) \end{array} \\\hline \text { Land } & 3500 & 4000 \\\hline \text { Buildings } & 1900 & 2000 \\\hline \text { Equipment } & 1300 & 2100 \\\hline\end{array}$$ What are the entries to record the formation of the joint operation in the books of Sting Ltd and Pink Ltd?

A)
$\begin{array}{l}\text { Sting Ltd's books: }\\\begin{array}{|c|l|r|r|}\hline & & (\$ 000) & (\$ 000) \\\hline \mathrm{Dr} & \text { Cash } & 3350 & \\\hline \mathrm{Cr} & \text { Land } & & 1750 \\\hline \mathrm{Cr} & \text { Buildings } & & 950 \\\hline \mathrm{Cr} & \text { Equipment } & & 650 \\\hline & & & \\\hline\end{array}\end{array}$

$\begin{array}{l}\text { Pink Ltd's books: }\\\begin{array}{|l|l|r|r|}\hline \mathrm{Dr} & \text { Land } & 1750 & \\\hline \mathrm{Dr} & \text { Buildings } & 950 & \\\hline \mathrm{Dr} & \text { Equipment } & 650 & \\\hline \mathrm{Cr} & \text { Cash } & & 3350 \\\hline\end{array}\end{array}$
B)
$\begin{array}{l}\text { Sting Ltd's books: }\\\begin{array}{|c|l|r|r|}\hline & & (\$ 000) & (\$ 000) \\\hline \mathrm{Dr} & \text { Cash } & 4050 & \\\hline \mathrm{Cr} & \text { Land } & & 1750 \\\hline \mathrm{Cr} & \text { Buildings } & & 950 \\\hline \mathrm{Cr} & \text { Equipment } & & 650 \\\hline \mathrm{Cr} & \text { Profit on sale of land } & & 250 \\\hline \mathrm{Cr} & \text { Profit on sale of buildings } & & 50 \\\hline \mathrm{Cr} & \text { Profit on sale of equipment } & & 400 \\\hline & & & \\\hline\end{array}\end{array}$

$\begin{array}{l}\text { Pink Ltd's books: }\\\begin{array}{|l|l|r|r|}\hline \text { Dr } & \text { Land } & 1750 & \\\hline \mathrm{Dr} & \text { Buildings } & 950 & \\\hline \mathrm{Dr} & \text { Equipment } & 650 & \\\hline \mathrm{Dr} & \text { Investment in JO } & 4750 & \\\hline \mathrm{Cr} & \text { Cash } & & 8100 \\\hline\end{array}\end{array}$
C)
$\begin{array}{l}\text { Sting Ltd's books: }\\\begin{array}{|c|l|r|r|}\hline & & (\$ 000) & (\$ 000) \\\hline \mathrm{Dr} & \text { Investment in JO } & 4050 & \\\hline \mathrm{Cr} & \text { Land } & & 1750 \\\hline \mathrm{Cr} & \text { Buildings } & & 950 \\\hline \mathrm{Cr} & \text { Equipment } & & 650 \\\hline \mathrm{Cr} & \text { Asset revaluation reserve } & & 700 \\\hline & & & \\\hline\end{array}\end{array}$

$\begin{array}{l}\text { Pink Ltd's books: }\\\begin{array}{|l|l|r|r|}\hline \mathrm{Dr} & \text { Investment in JO } & 4050 & \\\hline \mathrm{Cr} & \text { Cash } & & 4050 \\\hline\end{array}\end{array}$
D)
$\begin{array}{l}\text { Sting Ltd's books: }\\\begin{array}{|r|l|r|r|}\hline & & (\$ 000) & (\$ 000) \\\hline \mathrm{Dr} & \text { Cash } & 4050 & \\\hline \mathrm{Cr} & \text { Land } & & 1750 \\\hline \mathrm{Cr} & \text { Buildings } & & 950 \\\hline \mathrm{Cr} & \text { Equipment } & & 650 \\\hline \mathrm{Cr} & \text { Profit on sale of land } & & 250 \\\hline \mathrm{Cr} & \text { Profit on sale of buildings } & & 50 \\\hline \mathrm{Cr} & \text { Profit on sale of equipment } & & 400 \\\hline & & & \\\hline\end{array}\end{array}$

$\begin{array}{l}\text { Pink Ltd's books: }\\\begin{array}{|l|l|r|r|}\hline \text { Dr } & \text { Land } & 2000 & \\\hline \text { Dr } & \text { Buildings } & 1000 & \\\hline \mathrm{Dr} & \text { Equipment } & 1050 & \\\hline \mathrm{Cr} & \text { Cash } & & 4050 \\\hline\end{array}\end{array}$