X Ltd,Y Ltd and Z Ltd contractually form a joint operation on 1 July 2013 to construct an oil well to extract oil that each of the joint operators will refine.The three companies agree to contribute the following amounts of capital to the joint operation in the same proportion as their rights to the assets and outputs: $$\begin{array} { | r | r | r | }
\hline \text { XLtd } & \$ 25000000 & 50 \% \
\hline Y \text { Ltd } & \$ 15000000 & 30 \% \
\hline Z \text { Ltd } & \underline{\$ 10000000} & \underline { 20 \% } \
\hline & \underline{\$ 50000000} & \underline{100 \%} \
\hline
\end{array}$$ The funds are used on 1 July 2013 to purchase the land for $20 million and a rig and other equipment for $10 million.The balance of $20 million will be called on by the joint operation manager as required.Y Ltd and Z Ltd borrowed $5 million and $4 million respectively to finance their contributions to the joint operation.What entries would be required to record the establishment of the joint operation and where would these entries be made?

Question

X Ltd,Y Ltd and Z Ltd contractually form a joint operation on 1 July 2013 to construct an oil well to extract oil that each of the joint operators will refine.The three companies agree to contribute the following amounts of capital to the joint operation in the same proportion as their rights to the assets and outputs: $$\begin{array} { | r | r | r | } 
\hline \text { XLtd } & \$ 25000000 & 50 \% \
\hline Y \text { Ltd } & \$ 15000000 & 30 \% \
\hline Z \text { Ltd } & \underline{\$ 10000000} & \underline { 20 \% } \
\hline & \underline{\$ 50000000} & \underline{100 \%} \
\hline
\end{array}$$ The funds are used on 1 July 2013 to purchase the land for $20 million and a rig and other equipment for $10 million.The balance of $20 million will be called on by the joint operation manager as required.Y Ltd and Z Ltd borrowed $5 million and $4 million respectively to finance their contributions to the joint operation.What entries would be required to record the establishment of the joint operation and where would these entries be made?

Quizplus · Accepted Answer

The Answer of X Ltd,Y Ltd and Z Ltd contractually form a joint operation on 1 July 2013 to construct an oil well to extract oil that each of the joint operators will refine.The three companies agree to contribute the following amounts of capital to the joint operation in the same proportion as their rights to the assets and outputs: $$\begin{array} { | r | r | r | } 
\hline \text { XLtd } & \$ 25000000 & 50 \% \
\hline Y \text { Ltd } & \$ 15000000 & 30 \% \
\hline Z \text { Ltd } & \underline{\$ 10000000} & \underline { 20 \% } \
\hline & \underline{\$ 50000000} & \underline{100 \%} \
\hline
\end{array}$$ The funds are used on 1 July 2013 to purchase the land for $20 million and a rig and other equipment for $10 million.The balance of $20 million will be called on by the joint operation manager as required.Y Ltd and Z Ltd borrowed $5 million and $4 million respectively to finance their contributions to the joint operation.What entries would be required to record the establishment of the joint operation and where would these entries be made?

X Ltd,Y Ltd and Z Ltd Contractually Form a Joint