ABC and XYZ establish a joint arrangement using a separate vehicle. The legal form of the separate vehicle does not confer separation between the parties and the separate vehicle. The contractual terms of the joint arrangement provide for the following:ABC has rights to all of the equipment of the separate vehicleXYZ shall have 60% rights to the building of the separate vehicleABC has the obligation to the accounts payable of the separate vehicleThe other items are shared by the parties on a 50:50 ratio The separate vehicle provided the following statement of financial position:Assets Liabilities and EquityCashP 500,000 Accounts payableP1,800,000Building – net3,000,000 Notes payable1,500,000Equipment – net2,000,000 Equity2,200,000TotalP5,500,000 TotalP5,500,000 How much of the total assets of the separate vehicle would be presented in the separate statement of financial position of ABC?

A joint arrangement is one in which two or more parties have shared control. A distinct vehicle is…

Answered: ABC and XYZ establish a joint…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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ABC and XYZ establish a joint arrangement using a separate vehicle. The legal form of the separate vehicle does not confer separation between the parties and the separate vehicle. The contractual terms of the joint arrangement provide for the following:

ABC has rights to all of the equipment of the separate vehicle
XYZ shall have 60% rights to the building of the separate vehicle
ABC has the obligation to the accounts payable of the separate vehicle
The other items are shared by the parties on a 50:50 ratio

The separate vehicle provided the following statement of financial position:

Assets		Liabilities and Equity
Cash	P 500,000		Accounts payable	P1,800,000
Building – net	3,000,000		Notes payable	1,500,000
Equipment – net	2,000,000		Equity	2,200,000
Total	P5,500,000		Total	P5,500,000

How much of the total assets of the separate vehicle would be presented in the separate statement of financial position of ABC?

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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