Co and T Co formed a special purpose entity Z with the sole purpose of manufacturing and
Question:
Co and T Co formed a special purpose entity Z with the sole purpose of manufacturing and selling robotics. P Co and T Co agreed on the contractual sharing of power that required unanimous consent on all strategic activities of Z. By virtue of its rights to the assets of Z and its obligations for the liabilities of Z, P Co is a joint operator of Z and recognizes its share of the assets and liabilities of Z Co on its statement of financial position. 20x4 is the first year of operations for Z Co.?
Prior to the finalization of accounts, the draft financial statements of P Co and Z for 20x6 are shown below:
The party that has share of equity (in dollar terms) that is greater than share of net assets (in dollar terms) will recognize a receivable due from the other party.?
Required?
(a) Calculate the share of net assets and equity that is attributable to each operator. Determine the amount payable to or receivable from T Co.?
(b) Prepare the journal entry to record the effects of the joint operations on the financial statements of P Co.?
(c) Show the combined financial statements of P Co for the year ended 31 December 20x6 after incorporating the effects of the joint operations.
Financial Accounting an introduction to concepts, methods and uses
ISBN: 978-0324789003
13th Edition
Authors: Clyde P. Stickney, Roman L. Weil, Katherine Schipper, Jennifer Francis