On January 1, 2013, Lebron, Bosh and Dwayne (the joint operators) jointly but a helicopter for P30

million cash. The joint arrangement includes the following terms:
a.
b.
c.
d.

The parties are the joint owners of the helicopter
The helicopter is at the disposal of each party for 70 days each year
The parties may decide to use the helicopter or least it to a third party
The maintenance and disposal of the helicopter require the unanimous consent of the
parties
e. The contractual arrangement is for the expected life (20 years) of the helicopter and can be
change only if all parties agree. The residual value of the helicopter is nil
f. Revenues and expenses are to be shared equally among the joint operators.
In 2013, the parties paid P300,000 to meet the costs of maintaining the helicopter. In 2013, each
party also incurred costs of running the helicopter when they made use of the helicopter (e.g. Lebron
incurred costs of P200,000 on pilot fees, aviation fuel and landing costs). In 2013, the parties earned
rental income of P2.5 million by renting the helicopter to others.
1. What is the net income (loss) of the joint operation on December 31, 2013? P500,000
2. What is the book value of the helicopter in the books of Lebron on December 31, 2013? P28,500,000
3. What is the share of Bosh In the net income (loss) of the joint operation on December 31, 2013?
P166,667

Solution:
Rental Income
Operating Expenses (.3M + .2M)
Depreciation Expense (30M / 20 years)
Net Income
Cost
Accumulated Depreciation
Book Value
Net Income
Percentage allocation
Share of Bosh in Net Income

2,500,000
500,000
1,500,000
500,000
30,000,000
1,500,000
28,500,000
500,000
1/3
166,667

On January 1, 2011 entities A and B each acquired 30 per cent of the ordinary shares that carry
voting rights at a general meeting of shareholders of entity Z for P300,000. Entities A and B
immediately agreed to share control over entity Z.
For the year ended Dec. 31, 2011 entity Z recognized a profit of P400,000. On Dec. 30, 2011, entity
Z declared and paid a dividend of P150,000 for the year 2011. At Dec. 31, 2011, the fair value of each

The amount of investment to be recognized by entity A should be? P369. 2011. management assessed the fair values of its investment in entity Z as P102. 31.000. entity Z declared and paid dividend of P20. entity A uses the cost model to account for its investments in JCE. 31. 2011 at? P101.000 throughout. 2009.000) Net Income Purchase Price Share in Net Income (380k x 30%) Dividends Received (150k x 30%) ( 45. 2011 and 2012. 2011 and 2012.000 out of profits earned in 2009. At December 31. A fair valuation of the investments in entity Z determined using a reliable earnings multiple approach exists. In January 2010.000. Entities A and B account for jointly controlled entities using the equity method.venturers’ investment in entity Z is P425. entity A. At Dec. Entity A sells goods at a 50 per cent mark-up on cost. the goods purchased from entity A were in entity Z’s inventories (they had not been sold by entity Z). whereby entities A and C jointly controlled entity Z. Entity A measures its investment in entity Z on December 31. In acquiring those shares entity A incurred transaction costs of P1. P110. there is no published price quotation for entity Z. Entity A has entered into a contractual arrangement with another party (entity C) that owns 20% of the ordinary shares of entity Z.000. Costs to sell are estimated at P4. entity A sells goods for P60.000) On December 31. respectively. acquired 30% of the ordinary shares that carry voting rights of entity Z for P100. 2011. an SME. 2010.000 Investment in entity Z .000 to entity Z.000. However. No further dividends were paid in 2010. On Dec.000 and P90.000 Solution: Profit Unrealized gain [60k x (50%/150%)] ( 20.000.000 Solution: Purchase Price Transaction Costs 1.

2014. and JJJ (all are corporations) establish a joint undertaking to manufacture a product they agree to share equally.437. 2013. 2014 and in its December 31.000 for the year 2012.000 for the year ended December 31.000. entity Z declared a dividend of P175. entities X and Y each acquired 25 percent of the ordinary shares that carry voting rights at a general meeting of shareholders of entity C for P5.000 and the fair value is P200. Entities X and Y immediately agreed to share control over entity C. 2013? P502. 2013. 2014. entity C declared and paid a dividend of P2. On December 31. However. how much is the investment in December 31.667 and P60. HHH.437. P60.000. At what amount will each of the operators show the Equipment in JO in its January 1. 2013? P7. 2013. 2013. 2013. 2013.667 Determine the net amount JJJ will show the Equipment in JO account in its balance sheet at December 31. P55.000 for the year 2012. Each will contribute P200. how much is the investment in December 31.250 On January 1.250.000. 2013. to share control over entity Z.000.500. entity C recognized a profit of P7. Costs to sell is P5.500. 2014 balance sheets. Entities A and B immediately agreed.000. Determine the amount JJJ will show the Equipment in JO account in its balance sheet at January 1. There is no published price quotation for entity Z.625. On December 31. 2014.000 Assume the book carrying value of the equipment contributed by JJJ is P215. 2013. HHH and III are to contribute cash while JJJ is to contribute equipment with a cost of P185. Assuming Entity B uses the cost model to account for its investment in entity Z. The equipment has a remaining life of 10 years when contributed.437. P61.000.On January 1.500 Determine the net amount HHH (or III) will show the equipment in JO account in its balance sheet at December 31.000 into the operation.250. Entity Z reported a profit of P140. Assuming Entity X uses the cost model to account for its investment in entity C. the fair value of the investment is P507. entities A and B each acquired 30 percent of the ordinary shares that carry voting rights at a general meeting of shareholders of entity Z for P525. III. there is a published price quotation for entity C. the fair value of each venturers’ investment in entity C is P7. On December 31.500 On March 1. On December 31. respectively Solutions: . respectively? P66.500 Solution: Fair value of the investment 7. For the year ended December 31. 2014.000.

000 x 1/3) ( 5.000 -------------------------- 1/3 Equipment per books of JO. 1/1/14 66. 1/1/14 Accumulated depreciation Equipment per books of JO. 12/31/14 60. 1/1/14 (FV) Multiply by Each Joint operator’s equal share JJJ’s unrealized gain as of 1/1/14 (15. 1/1/14 Accumulated depreciation Equipment per books of JO. 12/31/14 1/3 -------------------------Equipment per books of JO.000 x 90%) ( 4.667 Equipment per books of JO.500) JJJ – Equipment in JO account 12/31/14 55.Equipment per books of JO.667 1/3 1/3 . 1/1/14 (FV) 1/3 Multiply by Each Joint operator’s equal share. 12/31/14 Multiply by HHH (or III) – Equipment in JO account 12/31/14 60.000 Equipment per books of JO.000 Multiply by Each Joint operator’s equal share.000) JJJ . 12/31/14 -------------------------- Multiply by Each Joint operator’s equal share JJJ’s unrealized gain as of 12/31/14 (5.Equipment in JO account 1/1/14 61.