When eliminating any unrealised profit arising when a joint operator provides services to a joint operation the profit is eliminated against:
A) the investment in the joint operation.
B) retained earnings.
C) work in progress, finished goods and other inventories related accounts.
D) cost of goods sold.

Question

Quizplus · Accepted Answer

Unrealised profit arising from services provided by a joint operator to a joint operation is eliminated against work in progress, finished goods, and other inventories related accounts, as these accounts represent the value of goods and services within the joint operation. The profit is not eliminated against investment in the joint operation or retained earnings, as these accounts represent the overall financial position of the joint operation rather than the value of specific goods or services. Cost of goods sold is not applicable as the profit has not yet been realised.

When Eliminating Any Unrealised Profit Arising When a Joint Operator