When eliminating any unrealised profit arising when a joint operator provides services to a joint operation the profit is eliminated against:
A) retained earnings.
B) cost of goods sold.
C) the investment in the joint operation.
D) work in progress, finished goods and other inventories related accounts.

Question

Quizplus · Accepted Answer

When a joint operator provides services to a joint operation and there's an unrealized profit, the profit is eliminated against accounts that directly relate to the inventory or production process, such as work in progress, finished goods, and other inventories related accounts. This adjustment ensures that the financial statements reflect the actual cost of inventories and production, not inflated by unrealized profits from intra-group transactions.

When Eliminating Any Unrealised Profit Arising When a Joint Operator