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ACCT73030-Assignment 3-F17(Revised) - Conestoga College ACCT 7303
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ACCT73030-Assignment 3-F17 (Revised) Conestoga College Advanced Accounting I: ACCT73030 Assignment # 3(Revised Assignment for previous 3 and 4): (2%+2%) =4% Section -1: 2% Joint-Arrangements 1. Company A and B agree to engage in a joint venture. Which of the following statements pertaining to...

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  • April 18, 2023
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  • 2022/2023
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ACCT73030-Assignment 3-F17 (Revised)

Conestoga College
Advanced Accounting I: ACCT73030
Assignment # 3(Revised Assignment for previous 3 and 4): (2%+2%) =4%

Section -1: 2%

Joint-Arrangements

1. Company A and B agree to engage in a joint venture. Which of the following statements pertaining to
joint ventures is correct?
A. Both parties to a joint venture must contribute an equal amount of resources to the venture.
B. The party contributing the most resources to the venture has control over the venture.
C. Both parties have joint control over the venture.
D. All joint ventures have a stated economic useful life.

2. How are intercompany transactions handled in a joint venture?
A. They are ignored.
B. They are completely eliminated.
C. Only the venturer's share of any after tax profit is eliminated.
D. Intercompany profits are treated as an adjustment to the acquisition differential



3. According to GAAP, what is the key feature of a joint arrangement?
A. One venturer has a controlling interest in the joint arrangement.
B. More than one venturer has a controlling interest in the joint arrangement.
C. Joint control, namely, no one venturer can unilaterally control the venture regardless of the size of the
equity contribution.
D. The two largest equity contributors will have joint control over the venture.



John Inc and Victor Inc. formed a joint venture on January 1, 2016. John invested plant and
equipment with a book value of $500,000 and a fair value of $800,000 for a 30% interest in the
venture which was to be called Jinxtor Ltd. Victor contributed assets with a fair value of $2,000,000
(including $200,000 in cash) for its 70% stake in Jinxtor. Jinxtor reported a net income of
$3,000,000 for 2016. John's plant and equipment were estimated to provide an additional 5 years of
utility to Jinxtor. The transactions set out above were considered to be of commercial substance.




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