A 60:40 joint operation was commenced between two participants. Participant One contributed cash of $60 000, and Participant Two agreed to provide technical services to the joint operation over a period of two years. The fair value of the services was determined to be $40 000 and the cost to provide the services was estimated to be $35 000 Using the line-by-line method of accounting, participant Two would record:

Question

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Under the line-by-line method, the cost incurred by Participant Two to provide the technical services is recorded as an expense, while the fair value is recorded as revenue. The entry would be:
Debit - Technical Services Expense: $35 000
Credit - Revenue from Joint Operation: $40 000

A 60:40 Joint Operation Was Commenced Between Two Participants