Lyon has a 40% share of a joint operation, a natural gas station. The following information...
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Lyon has a 40% share of a joint operation, a natural gas station. The following information relates to the joint arrangement activities: The natural gas station cost $15 million to construct and was completed on 1 January 2015. Its useful life is estimated at 10 years. . In the year, gas with a direct cost of $22 million was sold for $30 million. Additionally, the joint arrangement incurred operating costs of $1.5 million during the year. Assets, liabilities, revenue and costs are apportioned on the basis of the shareholding. Lyon has only contributed and accounted for its share of the construction cost, paying $6 million. The revenue and costs are receivable and payable by the other joint operator who settles amounts outstanding with Lyon after the year-end (31 December 2015) Show how Lyon would account for the above in its consolidated financial statements for the year ended 31 December 2015. Lyon has a 40% share of a joint operation, a natural gas station. The following information relates to the joint arrangement activities: The natural gas station cost $15 million to construct and was completed on 1 January 2015. Its useful life is estimated at 10 years. . In the year, gas with a direct cost of $22 million was sold for $30 million. Additionally, the joint arrangement incurred operating costs of $1.5 million during the year. Assets, liabilities, revenue and costs are apportioned on the basis of the shareholding. Lyon has only contributed and accounted for its share of the construction cost, paying $6 million. The revenue and costs are receivable and payable by the other joint operator who settles amounts outstanding with Lyon after the year-end (31 December 2015) Show how Lyon would account for the above in its consolidated financial statements for the year ended 31 December 2015.
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Lyons share of the natural gas station cost is 15 million x 40 6 million This has already been paid for and accounted for in Lyons financial statements For the year ended 31 December 2015 the joint arrangement sold gas with a revenue of 30 million x 40 12 million attributable to Lyon However the direct cost of the gas sold is 22 million x 40 88 million which is also attributable to Lyon Therefore Lyons share of the gross profit is 32 million 12 million 88 million The joint arrangement also incurred operating expenses of 15 million of which Lyons share is 15 million x 40 06 million Therefore Lyons share of the profit for the year is 26 million 32 million 06 million In Lyons consolidated financial statements the 26 million share of profit would be included in Lyons income statement ... View the full answer
Related Book For
Advanced Financial Accounting
ISBN: 978-0078025624
10th edition
Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker
Posted Date:
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