CHAPTER 6.pdf - Joint Arrangement 116 CHAPTER 6 SOLUTIONS...

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Joint Arrangement 116 CHAPTER 6 SOLUTIONS TO MULTIPLE CHOICES 6-1: a Rental Income P5 million Expenses (P200,000 + P P1,000,000) 1.2 Net income, 2013 P3.8 million 6-2: a Rental income P8.0 million Expenses .5 Net income, 2014 P7.5 million 6-3: a Investment P10.00 million Profit share (P3.8 million x 40%) 1.52 Interest entity A, Dec. 31, 2013 P11.52 million 6-4: d Investment P10.00 million 2013: Profit share (P3.8 M x 40%) in entity A 1.52 2014: Profit share (P7.5 M x 40%) in entity A 3.00 Dividends received (P3 M x 40%) (1.20) Interest in entity A, Dec. 31, 2014 P13.32 million 6-5: b Cash P 50,000 Transportation equipment 600,000 Furniture and fixtures 250,000 Total assets P900,000 6-6: c Cash P 50,000 Furniture and fixtures 250,000 Total assets P300,000 6-7: d Accounts payable P600,000 Other liabilities 100,000 Total liabilities P700,000 6-8: a Other liabilities P100,000
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117 Chapter 6 6-9: a Investment in Bank XY P50.0 M Profit share in Bank XY 2013 (P4 M x 40%) 1.6 M Interest of Bank X, December 31, 2013 P48.4 M 6-10: a Investment in Bank XY P50.0 M Profit share in Bank XY 2013 (P4 M x 40%) 1.6 M Profit share in Bank XY 2013 (P5 M x 40%) 2.0 M Dividends received (4 M x P40%) (1.6) M Interest of Bank Y, December 31, 2014 P52.0 M 6-11: a Cash (P3,000,000 less P700,000) P2,300,000 Property, plant and equipment P30,000,000 less P1,400,000) 28,600,000 Total assets P30,900,000 6-12: b Total equity P30,900,000 Divided by 3 Interest of each party P10,300,000 6-13: a At cost of P300,000. 6-14: c Dividends declared, 1/2/2013 (P100,000 x 30%) P30,000 Dividends declared, 12/31/2013 (P150,000 x 30%) 45,000 Total dividend income P75,000 6-15: a At fair value of P425,000. 6-16: a Fair value of investment P293,000 Cost to sell (3,000 ) Investment in entity AB, 12/31/2013 P290,000 6-17: a Cost P300,000 Recoverable amount 290,000 Impairment loss P 10,000 6-18: a Dividend income (P300,000 x 30%) P90,000 Increase in fair value (P850,000 P600,000) 250,000 Increased in profit and loss P340,000
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Joint Arrangements 118 6-19: b At fair value P850,000. 6-20: c Cost P300,000 Share in earnings of Entity Z (P400,000 x 30%) 120,000 Dividends received, 1/20/2013 (P100,000 x 30%) (30,000) Dividends received, 12/31/2013) (P150,000 x 30%) (45,000) Investment in Entity Z, 12/31/2013 P345,000 No impairment in 2013, fair value exceeds the carrying amount. 6-21: a Cost P300,000 Share in Entity Z’s loss (P100,000 x 30%) (30,000) Carrying amount of venturer’s investment in entity Z, 12/31/2013 P270,000 No impairment loss in 2013, carrying amount of P270,000 is lower that its recoverable amount 0f P310,000.
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