Connector Corporation invested in an unincorporated joint venture and elected to use pro rata consolidation in preparing its financial statements.Connector reported income of $120,000 from its separate operations and net income of $150,000 for the year ended December 31,20X8.The joint venture reported assets of $150,000 and liabilities of $60,000 on January 1,20X8,and assets of $240,000 and liabilities of $75,000 on December 31,20X8.It made no distributions to owners during the year.Connector reports total assets (excluding its investment in the unincorporated joint venture)of $550,000 at December 31,20X8.
-Based on the preceding information,what amount of total assets will Connector report in its balance sheet on December 31,2008?
A)$646,000
B)$625,000
C)$610,000
D)$628,000

Question

Quizplus · Accepted Answer

Connector's share of the joint venture's net assets at December 31, 20X8 is $240,000 - $75,000 = $165,000. The increase in net assets from January 1, 20X8 ($150,000 - $60,000 = $90,000) to December 31, 20X8 is $165,000 - $90,000 = $75,000. Connector's share of this increase is $75,000. Adding this to Connector's separate assets of $550,000 gives $550,000 + $75,000 = $625,000. However, the correct calculation should consider the full net assets of the joint venture at year-end, which is $165,000. Adding this to Connector's separate assets gives $550,000 + $165,000 = $715,000. The correct choice is not listed, indicating a potential error in the options provided.

Connector Corporation Invested in an Unincorporated Joint Venture and Elected