Question 6 (8 marks) Joanne Ackman is the owner of JCJ Inc. (JCJ),...
90.2K
Verified Solution
Link Copied!
Question
Finance
Question 6 (8 marks)
Joanne Ackman is the owner of JCJ Inc. (JCJ), which provides residential landscaping services. Joanne and her husband, Carlos, each have a 33.3% interest in Blades Equipment Ltd. (Blades), which rents heavy-duty machinery. The remaining third of Blades is owned by Marea Matty, a third party.
During the current year, Blades sold a small bulldozer to JCJ for $27,500. Third-party retailers were charging $42,000 for similar bulldozers. The bulldozer was carried on the books of Blades at $30,000 prior to its sale.
Both JCJ and Blades report under ASPE.
Required:
- Using the related party transaction decision tree, explain how the purchase of the bulldozer should be recorded by both JCJ and Blades. Provide all necessary journal entries. (6 marks)
- If JCJ had exchanged landscaping services valued at $42,000 for the bulldozer, explain how this would change the related party transaction decision tree from the response in part (a). Assume that the transaction does NOT have commercial substance. (2 marks)
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
- Unlimited Question Access with detailed Answers
- Zin AI - 3 Million Words
- 10 Dall-E 3 Images
- 20 Plot Generations
- Conversation with Dialogue Memory
- No Ads, Ever!
- Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.