Entity X obtains control over a join arrangement for an investment of P220,000. The investment gives Entity X 40% interest on the net assets of the arrangement. The joint arrangement earns profit of P1,800,00 and distributes earnings of P500,000 to the owners

Entity X obtains control over a join arrangement for an investment of P220,000. The investment gives Entity X 40% interest on the net assets of the arrangement. The joint arrangement earns profit of P1,800,00 and distributes earnings of P500,000 to the owners

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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Concept explainers

Partnership Accounting

A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.

Partner Admission and Withdrawal

A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.

Question

1. Compute for the income from investment of Entity X

2. Compute for the balance of Investment account of the joint venture, for the end of the year

HOOTIN
NIVERSIT
Entity X obtains control over a join
arrangement for an investment of
P220,000. The investment gives Entity
X 40% interest on the net assets of the
arrangement. The jointement
earns profit of P1,800,00 and distributes
earnings of P500,000 to the owners

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