1. Compute for the income from investment of Entity X2. Compute for the balance of Investment account of the joint venture, for the end of the yea Accounting for Investment in Joint Venture3. Entity X obtains joint control over a joint arrangement for aninvestment of P220,000. The investment gives Entity X 40%interest on the net assets of the arrangement. The jointarrangement earns profit of P800,000 and distributes earningsof P500,000 to the owners.

INVESTMENT AMOUNT - 220000 Interest - 40% Profit of the arrangement 800000 Earnings distributed -…

Answered: Accounting for Investment in 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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Q13 The trading result of a joint venture arrangement is determined in the________. Select one: a. co-venturers account b. memorandum joint venture account c. venturers personal account d. income statement
Question 16 This principle requires measurement of transaction on the basis of cost price or equal to cash price A. Full disclosure B. Exchange price principle C. Matching principle D. Revenue recognition principle Question 19 The rights of the partner over the net assets of the business is called A. Parter's drawing B. Partners equity C. Partners capital D. None of the above
Accounting type Question: As per the decision in the Garner vs Murray case, when the partner's capital accounts are fixed, any loss arising due to the capital deficiency in the insolvent partner's capital account is to be borne by solvent partners in the ratio of ..... A. profit sharing ratio B. last agreed capital ratio C. sacrificing ratio D. gaining ratio
The investor’s interest in an associate for purposes of recognizing its share of losses of an associate is I. The carrying amount of the investment in the associate determined using the equity method. II. Any long-term interests that, in substance, form part of the entity’s net investment in the associate. choices I only. II only. Both I and II. Higher of I and II.
Accumulated Reserve on admission of a partner can be divided using? O a. New Profit Sharing Ratio O b. Gaining Ratio O c. Old Profit Sharing Ratio d. Sacrificing Ratio
Problem #12 Admission by Investment of Assets Magdaraog and Mercado are partners in Magdaraog and Mercado Partnership with capital balances of P550,000 and P350,000, respectively; they share income and loss in the ratio 1:3, respectively. The partners are considering the admission of San Pedro. Required: Prepare the entries to record the admission of San Pedro under each of the following independent situations: 1. San Pedro invested P100,000 cash in the partnership for a one-tenth interest. The net assets of the partnership are fairly valued. 2. San Pedro invested P140,000 cash in the partnership for a one-eight interest. Assets of the partnership are fairly valued except for equipment, which is undervalued by P80,000. Net assets of the partnership are to be revalued and San Pedro is to be admitted. 3. San Pedro is to receive a one-tenth interest in the partnership upon investing P180,000 cash. Net assets of the partnership are fairly valued. San Pedro is to be admitted using the bonus…
Exercise 2: Division of Income (I attached the question for Exercise 1 so please check it out. Thanks) Assume that in Exercise 1, the partnership of Bong and Lapira realized a net income of P17,400. How much must be the share of each partner therein under each of the following methods of dividing net income? Net income is divided based on the beginning capital ratio. Net income is divided based on the ending capital ratio. Net income is divided based on the average capital ratio. Interest of 12% is allowed on average capital with the remainder divided in the ratio of 6:4 between Bong and Lapira, respectively. Interest of 10% is allowed on average capital, salary allowance of P8,000 is given to Lapira, remainder to be divided in the ratio of 3:7 between Bong and Lapira.
Q15 Profit or loss on a joint venture is shared by the co-ventures __________. Select one: a. as per the agreement b. equally c. as per managerial involvement in the operations of the joint venture d. in the capital ratio
1) Merchandise invested by an entity under a joint operation agreement should include an entry of a)Debit to Joint Operation under the books of the Joint Operators other than the party who invested b)Credit to merchandise inventory of the Joint Operator who contributed merchandise c)Credit to merchandise Inventory of all the Joint Operators d)Credit to Joint Operation under the books of the party investing the merchandise 2) The interest of the retiring or withdrawing partner is usually measured by his capital balance before his retirement or withdrawal adjusted by the following adjustments except a)profit or loss after the date of the partner’s withdrawal or retirement b)changes in the valuation of all assets and liabilities c)errors in net income in prior years d)profit or loss from the operation from the last closing date of the date of his retirement or withdrawal 3)In case of admission of a partner, the first adjustment that need to be prepared is a) The…
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If a firm is maintaining both capital accounts and current accounts of the partners A and B. Additional capital introduced by B will be recorded in: O a. Partner B's current account O b. Either in current account or capital account O c. Partner B's capital account o d. All options are correct

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