The loan payable is secured by the machinery with

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The loan payable is secured by the machinery with fair value of P300,000. The mortgage payable is secured by the building. At the end of liquidation, the holder of loan payable received P340,000. 22. What is the amount received by the holder of accounts payable at the end of liquidation? A. 85,000 B. 15,000 C. 40,000 D. 60,000 23. What is the amount of net free assets available at the end of liquidation? A. 80,000 B. 40,000 C. 120,000 D. 200,000
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Page 9 Numbers 24, 25 and 26 (Joint Arrangement classified as Joint Operation) Entity A and Entity B incorporated Entity C to manufacture a microchip to be used by the incorporating entities as component for their final products of cellular phones and tablets. The contractual agreement of the incorporating entities provided that the decisions on relevant activities of Entity C will require the unanimous consent of both entities. Entity A and Entity B have rights to the assets, and obligations for the liabilities, relating to the arrangement. The ordinary shares of Entity C will be owned by Entity A and Entity B in the ratio of 60:40. At the end of first operation of Entity C, the financial statements provided the following data: Inventory 1,000,000 Accounts payable 2,000,000 Land 3,000,000 Note payable 1,000,000 Building 5,000,000 Loan payable 4,000,000 Share capital 1,000,000 Retained earnings 1,000,000 Sales revenue 5,000,000 The contractual agreement of Entity A and Entity B also provided for the following concerning the assets and liabilities of Entity C: Entity A owns the land and incurs the loan payable of Entity C. Entity B owns the building and incurs the note payable of Entity C. The other assets and liabilities are owned or owed by Entity A and Entity B on the basis of their capital interest in Entity C. The sales revenue of Entity C includes sales to Entity A and Entity B in the amount of P1,000,000 and P2,000,000, respectively. As of the end of the first year, Entity A and Entity B were able to resell 30% and 60% of the inventory coming from Entity C to third persons. 24. What is the amount of total assets to be reported by Entity A concerning its interest in Entity C? A. 5,400,000 B. 3,000,000 C. 3,600,000 D. 5,000,000 25. What is the amount of total liabilities to be reported by Entity B concerning its interest in Entity C? A. 1,800,000 B. 2,200,000 C. 2,800,000 D. 2,400,000 26. What is the amount of sales revenue to be reported by Entity A concerning its interest in Entity C? A. 2,300,000 B. 2,100,000 C. 3,000,000 D. 2,500,000
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Page 10 Numbers 27 and 28 (Joint Arrangement classified as Joint Venture Equity Method) On January 1, 2018, Entity A, a public entity, and Entity B, a public entity, incorporated Entity C which has its fiscal and operational autonomy. The contractual agreement of the incorporating entities provided that the decisions on relevant activities of Entity C will require the unanimous consent of both entities. Entity A and Entity B will have rights to the net assets of Entity C. Entity A and Entity B invested P1,000,000 and P1,500,000, respectively, equivalent to 40:60 capital interest of Entity C. The financial statements of Entity C provided the following data for its two-year operation: Net income (loss) Dividends declared 2018 200,000 100,000 2019 (2,000,000) - 27. What is the balance of Investment in Entity C to be reported by Entity A in its Statement of
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