When eliminating any unrealised profit arising when a joint operator provides services to a joint operation, the profit is eliminated against:
A) the investment in the joint operation.
B) fee revenue.
C) work in progress, finished goods and other inventories-related accounts.
D) cash in JO.

Question

Quizplus · Accepted Answer

Unrealized profit arising from transactions between joint operators and joint operations should be eliminated against the inventories that are attributable to the transaction. This means that the profit should be eliminated against work in progress, finished goods and any other inventories-related accounts, as these are the accounts that will be affected by the transaction. The profit should not be eliminated against investments in the joint operation, fee revenue or cash in the joint operation.

When Eliminating Any Unrealised Profit Arising When a Joint Operator