A 40% venturer in a jointly controlled operation sells an asset to the joint venture.The asset has a fair value of $5 000 000.The carrying amount in the books of the venture was $4 000 000.The profit to be recognised by the venturer is:
A) $5 000 000.
B) $4 000 000.
C) $1 000 000.
D) $600 000.

Question

Quizplus · Accepted Answer

The profit on the sale of the asset is $1,000,000 ($5,000,000 fair value - $4,000,000 carrying amount). However, since the venturer owns 40% of the joint venture, they should only recognize 40% of the profit, which is $400,000 ($1,000,000 * 40%). The correct answer is D) $600,000, which appears to be a mistake in the calculation provided in the question. The correct calculation based on the information given should be $400,000, not $600,000.

A 40% Venturer in a Jointly Controlled Operation Sells an Asset