On 30 June 2013,Perkins Ltd,Thorpe Ltd and Hackett Ltd entered into a joint operation to produce apparel and related products for the Australian national swimming team.The joint operators equally share in output and costs.On the same date,the recorded amounts of each joint operator's contributions are as follows: $$\begin{array} { | l | r | r | r | }
\hline & \begin{array} { r }
\text { Perkins Ltd } \
\text { (Machinery) }
\end{array} & \begin{array} { r }
\text { Thorpe Ltd } \
\text { (Equipment) }
\end{array} & \begin{array} { r }
\text { Hackett Ltd } \
\text { (Cash) }
\end{array} \
\hline \text { Historical cost } & \$ 900000 & \$ 600000 & - \
\hline \text { Accumulated depreciation } & \$ 200000 & \$ 100000 & - \
\hline \text { Agreed value } & \$ 600000 & \$ 600000 & \$ 600000 \
\hline
\end{array}$$ Assume that agreed values equal recoverable amount and no revaluations have occurred.
Which of the following combinations correctly indicates the effects on the statement of financial position and statement of financial performance of Hackett Ltd,respectively,after processing the journal entries to account for this joint operation arrangement?

Question

On 30 June 2013,Perkins Ltd,Thorpe Ltd and Hackett Ltd entered into a joint operation to produce apparel and related products for the Australian national swimming team.The joint operators equally share in output and costs.On the same date,the recorded amounts of each joint operator's contributions are as follows: $$\begin{array} { | l | r | r | r | } 
\hline & \begin{array} { r } 
\text { Perkins Ltd } \
\text { (Machinery) }
\end{array} & \begin{array} { r } 
\text { Thorpe Ltd } \
\text { (Equipment) }
\end{array} & \begin{array} { r } 
\text { Hackett Ltd } \
\text { (Cash) }
\end{array} \
\hline \text { Historical cost } & \$ 900000 & \$ 600000 & - \
\hline \text { Accumulated depreciation } & \$ 200000 & \$ 100000 & - \
\hline \text { Agreed value } & \$ 600000 & \$ 600000 & \$ 600000 \
\hline
\end{array}$$ Assume that agreed values equal recoverable amount and no revaluations have occurred.
Which of the following combinations correctly indicates the effects on the statement of financial position and statement of financial performance of Hackett Ltd,respectively,after processing the journal entries to account for this joint operation arrangement?

Quizplus · Accepted Answer

The agreed value of the cash contribution is equal to its historical cost, so there is no change to Hackett Ltd's assets. The joint operation is a profit-sharing arrangement, so there is no change to Hackett Ltd's profit.

On 30 June 2013,Perkins Ltd,Thorpe Ltd and Hackett Ltd Entered